June 26, 2024 at 05:09AM
USD/CAD
Could see significant upward movement, particularly in a risk-off market.
As the Fed and BoC policies diverge, with the Fed potentially being less dovish than the BoC, the USD/CAD pair is likely to benefit.
Investors might not currently be pricing in this divergence fully, providing scope for a significant rise in USD/CAD, especially above the 1.40 mark in risk-off scenarios.
GBPCAD
Long GBP/CAD positions are recommended due to expected policy divergence between the BoC and the Bank of England (BoE).
The BoC is expected to cut rates more aggressively than the BoE. This divergence supports a bullish view on GBP/CAD.
The potential for CAD to become a funding currency further supports the attractiveness of GBP/CAD longs, particularly if UK inflation remains sticky, limiting the scope for BoE rate cuts.
This article was written by Arno V Venter at www.forexlive.com.