FX trade idea from Westpac:
Analysts at Westpac are out with their latest 'high-conviction' trade idea and it involved the Canadian dollar.
They were stopped out in a recent long in the pair but wish to re-enter at 1.3238 (spot at 1.3271). Westpac notes that the loonie hasn't been able to take advantage of recent tailwinds.
"USD/CAD's uptrend may have stalled in the last month but by the same token, and perhaps tellingly, CAD has failed to capitalise on what has been a notable bounce in energy prices (WTI +19% from its late Aug lows), a stabilisation in the local data flow and Poloz' more upbeat take on the Canadian outlook," they write. "These improved atmospherics are not sustainable in any case."
They expect Canadian growth to fall short of the 2% annualized pace the BOC forecasts for the second half of the year and see them cutting in December or Q1. They target 1.35 by year end and have a stop at 1.31.
In a separate trade, they recommend long USD/CHF at about 200 pips below spot with a target at parity and a stop at 0.9425.
