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Short NZD/CAD - SocGen

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 10, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Kit Juckes, Research Analyst at Societe Generale, suggests to go short on the NZD/CAD pair and suggests various reasons for the same.

    Key Quotes

    “Short NZD/CAD is based on four factors. 1) In a race to the bottom, there’s more room for NZD yields to fall than for CAD ones. 2) Valuation matters in Canada, given the sheer scale of its border with the US, which is less true of NZD. 3) It may take ages, but the supply overhang in oil will clear before the one in other commodity markets where FX moves have compensated for falling dollar prices. And 4) while Canada is going to be affected by the slowdown in China and would be affected negatively by a bigger Yuan depreciation, it is less affected than New Zealand or Australia. All of these arguments are, it seems to me, intact. I’m targeting 0.88 on this trade with a stop at 0.9350.”
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