6 Mar 2015
CAD earns an edge over AUD - SocGen
FXStreet (Bali) - On its FX Weekly report, the Research Team at Societe Generale recommends buying USD/CAD puts financed by AUD/USD calls as a conditional RV trade.
Key Quotes
The BoC has plenty of time to contemplate new cuts: the negative oil shock should be delayed as prices are now recovering, the CAD has already weakened a lot, and the inflation profile is less dovish."
"In contrast, the RBA is extremely likely to cut rates again in April or May. The AUD now appears vulnerable, and the CAD should outperform it."
"The CAD tends to exhibit larger deviations than the AUD, but with a lower volatility. In addition, the AUD/USD vol risk premium is currently excessive."
"We recommend Buying USD/CAD puts financed by AUD/USD calls as a conditional RV trade. A separate analysis suggests it isn’t time yet to sell USD/CAD deep OTM upside strikes
Key Quotes
The BoC has plenty of time to contemplate new cuts: the negative oil shock should be delayed as prices are now recovering, the CAD has already weakened a lot, and the inflation profile is less dovish."
"In contrast, the RBA is extremely likely to cut rates again in April or May. The AUD now appears vulnerable, and the CAD should outperform it."
"The CAD tends to exhibit larger deviations than the AUD, but with a lower volatility. In addition, the AUD/USD vol risk premium is currently excessive."
"We recommend Buying USD/CAD puts financed by AUD/USD calls as a conditional RV trade. A separate analysis suggests it isn’t time yet to sell USD/CAD deep OTM upside strikes