CAD pessimism looks overdone, in the view of Kit Juckes, Chief Global FX Strategist at Société Générale.

In 2019, peak Fed Funds signalled peak USD/CAD

“No-one expects the Bank of Canada to hike rates on April 14, rate differentials and consensus growth forecasts are both CAD-unfriendly. Soft oil prices don’t help, and a North American banking crisis could spill over the border. All of these negative factors are known, however.”

“Short USD/CAD on this basis, is well positioned to benefit from a gradual easing in concerns about the banking sector, and a peak in Fed rates. The last time the speculative market was this short of CAD, back at the start of 2019, the Fed had just finished hiking rates, and by the end of the year, USD/CAD was back under 1.30.”