Does the Canadian dollar have a bullish surprise up its sleeve?
This is the question I am asking myself as we head into 2025. CAD has been the weakest major for some time now based on the BOC's easing cycle, and we saw a record level of net-short exposure against it in August, and another surge of shorts in November. This strikes me as a stale trade that is vulnerable to a shakeout, and it might not require a particularly large catalyst for CAD bears to capitulate and send USD/CAD lower.
MS
MS
Trade active
So far, not so good, with USD/CAD now teasing the YTD high ahead of the BOC meeting.
The Central Bank could cut rates by 50bp but then signal a slower pace of easing in 2025. And that could be the first step of a turnaround for CAD bulls. This idea needs more time to develop, but one I will revisit with revised levels in due course.
MS
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.