Short CAD on Structural and Cyclical Risks to Canada

The time to be most concerned with an economy is when cyclical risks align with the structural ones. In Canada there is evidence this is happening. The most overt structural risk in Canada is the huge household debt-to-income ratio, significantly bigger than the US’s,...

RUBCAD to Catch up to Crude Oil

RUBCAD tends to be a FX pair that’s highly correlated with moves in Brent (top-left chart). The main appeal of RUBCAD as a relative-value trade against crude is that there is much less direct US dollar exposure from the trade. Both Russia and Canada are dependent on...

Fade Bank of Canada Rate Hikes

This post is taken from our March 13th weekly report. In our February Monthly we suggested selling CAD, and buying Bankers’ Acceptances (BAs), the Canadian analogue of Eurodollar futures. With ~64bps of rate rises priced in from the Bank of Canada over the next year,...

Short AUDCAD As Proxy China Trade

Although both AUD and CAD are commodity currencies, given Australia’s outsized exposure to China, AUDCAD can be used as a proxy trade on the Chinese economy. AUDCAD is approaching the top of its range just as Chinese liquidity is rolling over. In our March Leading...