EUR/CAD — Heading Into Buy-Side Territory

A chart that caught my attention this morning is the CAD against the EUR. It’s fast approaching the origin of a major demand area where we saw an impulsive move up. What’s most compelling is that we could be buying Euros at a rate that makes the deal really attractive from a valuation perspective, as the German vs Canadian bond yield spread exhibits a major divergence with price. If we look back the last quarter, the price has been moving in lockstep with the spread, hence making a buy-side campaign off 1.52–5220 an idea worth considering. The meteoric rise in the Loonie in the early days of ’19, also appears to be out of whack with the more moderate recovery observed in the price of Oil, now heading back to retest $50.