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Forex

Weak CAD Positioning Paves Way for USD/CAD Mean Reversion Opportunities

Guavy AI Editorial Team
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USD CAD
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CAD positioning remains weak ahead of the Bank of Canada (BoC) decision, with USD/CAD dominating flows and cross-currency activity surprisingly limited. According to BNY's Geoff Yu, recent CAD inflows were mainly mean reversion, while fundamentals offer little support.

Despite trade tensions with the United States (US) and BoC lagging G10 peers on hikes, positioning suggests scope for further USD/CAD-driven mean reversion. Yu notes that 'USD/CAD is fully driving CAD flow,' which also shows limited activity in CAD on the crosses.

The challenge now is for USD/CAD to find selling interest based on CAD fundamentals, which are lacking for now.

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