Weak Canadian Dollar Positioning Ahead of Bank of Canada Decision

The Canadian Dollar's (CAD) positioning remains weak ahead of the Bank of Canada's (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. The BoC has been lagging its G10 peers on hikes, but this hasn't had a significant impact on the currency.

The positioning suggests scope for further USD/CAD-driven mean reversion, with USD/CAD flows dominating CAD dynamics. Despite some light interest ahead of the decision, there is no conviction behind it, and fundamentals are lacking.