BoC Cuts & RBA Hold - AUDCAD Double Whammy!
Highlights overnight going to AUD with overshoots in the U-rate as expected. This number is going to trigger the RBA surprise hold that we have been tracking in this diagram:
Large hands spotted on the AUD bid last ear and will continue to do so as a lot more unwinding of positions needs to take place from those betting on FURTHER rate cuts. Tracking 0.692x in AUDUSD as a sensible target from the initial knee-jerk reaction.
The strategy for the flows from the AUD side in the chart have been dissected here in this diagram:
On the CAD side, Poloz caught me by surprise with a very dovish BoC. This was particularly surprising considering his pokerface at the fireside chat only two weeks ago! Focus now shifts onto whether this will be a “one off” cut…in my books the move in USDCAD should be contained by the 1.32 handle - the data (although below par) is not weak enough to justify a full blown cutting cycle. On the positioning side, long and medium term flows are still betting heavily long CAD so expect 1.32xx to provide a good opportunity to re-engage with a swing back towards 1.28xx later in the year as those longs from the recent rally begin to unwind.
Good luck all those in AUDCAD and holding for the long-term, this is going to the highs like a knife through butter. As usual, thanks for all the support with likes, comments, charts and etc !!
Large hands spotted on the AUD bid last ear and will continue to do so as a lot more unwinding of positions needs to take place from those betting on FURTHER rate cuts. Tracking 0.692x in AUDUSD as a sensible target from the initial knee-jerk reaction.
The strategy for the flows from the AUD side in the chart have been dissected here in this diagram:
On the CAD side, Poloz caught me by surprise with a very dovish BoC. This was particularly surprising considering his pokerface at the fireside chat only two weeks ago! Focus now shifts onto whether this will be a “one off” cut…in my books the move in USDCAD should be contained by the 1.32 handle - the data (although below par) is not weak enough to justify a full blown cutting cycle. On the positioning side, long and medium term flows are still betting heavily long CAD so expect 1.32xx to provide a good opportunity to re-engage with a swing back towards 1.28xx later in the year as those longs from the recent rally begin to unwind.
Good luck all those in AUDCAD and holding for the long-term, this is going to the highs like a knife through butter. As usual, thanks for all the support with likes, comments, charts and etc !!
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