Westpac's "high conviction FX trades based on our macro, model and technical views"

The TL;DR version is:

  • Buy USD/CAD into 1.3170, stop at 1.3030.

Westpac citing:

  • Two among three bearish signals for CAD this week give us a buy USD/CAD on dips signal.
  • We leave an order to buy USD/CAD into 1.3170, with a stop at 1.3030.
  • This could be it for USD/CAD's downleg since mid-Jan, neither CA-US 2yr bond spreads nor oil prices offering much confidence for sustained trade in USD/CAD sub-1.35.
  • In fact 2yr bond spreads and oil prices both more fairly value USD/CAD nearer 1.38-1.40, substantially higher than current levels.