CAD to outperform, go short on CHF/CAD – Morgan Stanley

Analysts at Morgan Stanley offer their bullish outlook on the Canadian dollar, recommending going short on CHF/CAD.

Key quotes

"We expect CAD gains as domestic COVID-19 cases continue to fall, rising global growth expectations support commodity prices, and economic activity outperformed BOC  forecasts (and the market prices in a resulting QE taper)." 

"As enactment of fiscal stimulus approaches in the US, we expect US real yields to rise and breakevens to widen - an environment where CAD typically outperforms low yielders. We recommend short CHF/CAD positions."