Goldman Sachs says long CAD not preferred to capture US dollar weakness

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Key Points </p><p>
1. BoC Rate Hike: The Bank of Canada (BoC) has implemented another 25bp rate hike, which was in line with market expectations. </p><p>2. Potential for Further Hikes: There's an increased likelihood of another rate hike later in the year, possibly as soon as September. This speculation arises from the BoC's resolute commitment to revert inflation back to the 2% target. The threshold for a pause in rate hikes appears higher now, signaling potential continuity in this tightening trajectory. </p><p>3. Currency Implications: However, another rate hike might not have the same positive effect on the currency in the short term as before. With the Dollar experiencing a weakening phase due to moderating inflation concerns, CAD might face challenges in other currency pairs. </p><p>4. CAD vs. USD Dynamics: While a declining Dollar should typically push USD/CAD lower, the Canadian dollar is not Goldman's first choice for capitalizing on USD's weakness. This is primarily due to CAD's high sensitivity (or beta) to USD movements.</p><p align="left">
This
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This article was written by Eamonn Sheridan at www.forexlive.com.