MUFG trade of the week: We stay long USD/CAD

Last week, MUFG Research sold the loonie and this week they continue to like that trade. MUFG maintains a long USD/CAD in its ToTW portfolio targeting a move towards 1.4550, and a stop at 1.3850.

“We are maintaining our long USD/CAD trade idea. The pair has continued to move higher over the past week rising above the 1.4200-level for the first time since April 2020. The CAD has weakened further after the BoC delivered a second consecutive larger 50bps rate cut as they bring rates down to neutral more quickly,” MUFG notes.

“At the same time, we still believe there is room for the CAD to weaken more to reflect heightened trade policy uncertainty after Trump threatened to impose tariffs on Canada. While we do not expect significant tariff hikes to be put in place, the uncertainty should continue to weigh on CAD in the near-term,” MUFG adds.

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This article was written by Adam Button at www.forexlive.com.