USDCAD daily
SocGen highlights that the unwinding of CAD shorts is still in progress, noting that substantial CAD short positions accumulated earlier this year have begun to reverse, impacting USD/CAD.
Key Points:
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Unwinding of Yen Shorts: The recent focus has been on the unwind of large yen short positions, which have normalized since early August. This shift has been significant but is no longer the primary FX positioning story.
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Current Focus on CAD: The largest remaining FX position is the short against CAD, accumulated between March and July. Recent movements indicate a reversal of these positions, pushing USD/CAD down from 1.40 to below 1.35.
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Ongoing CAD Short Covering: Given the scale of the remaining CAD short positions, SocGen believes that the covering process is still underway and has further to go, suggesting continued pressure on USD/CAD.
Conclusion:
The significant CAD short positions from earlier this year are still being unwound, and SocGen expects CAD short covering to continue, which could keep USD/CAD under pressure in the near term.
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