The Canadian dollar is hitting simply about other novel 5-year depression this morn next the Bank of Canada's conclusion to keep its benchmark involvement charge per unit of measurement at 1%.
"Although the telephone substitution drivers of increment in addition to futurity inflation look to hold upwardly strengthening, inflation is expected to stay good below target for simply about time, in addition to hence the downside risks to inflation bring grown inward importance," said the Bank inward a statement, causing traders to force the loonie lower to reverberate greater chances of additional easing ahead.
"Today the BoC has told the marketplace inward multiple ways that CAD weakness is desirable in addition to the marketplace should continue pushing on an opened upwardly door," says Alan Ruskin, global caput of G-10 FX strategy at Deutsche Bank.
The deed inward the U.S. dollar-Canadian dollar substitution charge per unit of measurement today is sizable — USD is upwardly 0.8% against CAD — but CAD has lurched lower inward several sessions since the plow of the novel twelvemonth on this theme, in addition to USD is already upwardly to a greater extent than than 4% against CAD inward the twelvemonth to date.
Société Générale senior forex strategist Sebastien Galy hints that the surround is like to that inward which the U.S. dollar shot upward against the Japanese yen concluding twelvemonth every bit expectations built for a substantial monetary easing create there.
"USD/CAD is ane the principal trending currencies amongst TRY technically, in addition to from a modeling perspective inward a intermission of regime, which is the complicated agency of proverb it no longer trades every bit it used to for many years," says Galy. "This makes criterion regression-based valuation metrics obsolete every bit they volition largely follow spot every bit happened amongst USD/JPY nether Abenomics."
The nautical chart below shows how much speculators bring already piled into the trade. The cyberspace seat of futures traders at the Chicago Mercantile Exchange is ane of the largest shorts inward years.
