Stay long GBPAUD and USDCAD targeting 2.25 and 1.35 respectively
In his speech RBA Governor Stevens did not mention monetary policy. Similarly, there were no major new elements in the BoC Deputy Governor Schembri’s speech although his comment that household debt risks are manageable can be read as suggesting those risks won’t stop the BoC from cutting rates again. Market pricing for both the RBA and BoC remains very benign, with 8bp and 16bp of potential easing priced in over the next two policy meetings for the RBA and BoC respectively. Our economists think the BoC cut by 25bp at their 21 October meeting. We remain long USDCAD with a 1.35 target and long GBPAUD with a 2.25 target. [BNPP]
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