– Fade the FOMC minutes, sell the USD vs. commodity bloc
Tonight’s FOMC minutes release will almost certainly sound hawkish as they had done in January in February, with most of the US data having surprised positively on the month. It will also show the views of the core-FOMC (more dovish) with other more hawkish non-voting members. But we wouldn’t read too much into the document as it is dated following Friday’s weaker payrolls report. The dollar index has lurched lower through key support levels. We remain happy running with our short USDCAD recommendation (from 1.0270 targeting 0.9935). Still elevated CAD short positions should provided a tail wind to further CAD gains. Indeed, BNP Paribas FX Positioning Analysis (see page 10 of Global FX Plus) tags both CAD and JPY as the most crowded short position (with score of -25).
Click here to read the full report: FX Daily
BNP Paribas