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Forex Flash: Look for short CAD/NOK opportunities - Nomura

FXstreet.com (Barcelona) - Nomura strategists are recommending a new relative value trade, which they feel is essentially positioning for CAD underperformance, structured in a relatively risk-neutral fashion.

They believe that the recent increase in the Canadian price of oil (WCS) is mainly the result of supply disruptions, leading to an appreciation in CAD. They think that as the supply comes back over the next few weeks, the price of WCS will under perform other international benchmarks, especially Brent. They add that the expected under performance of the WCS, in addition to already weaker than-expected economic growth and a dovish Bank of Canada, should lead CAD to gradually underperform most other currencies over the next two to three months. They write, “We like expressing this view relative to NOK, as it allows us to directly trade our oil price view. Moreover, there are only 5bp of cuts being priced in for the Norges Bank and we believe that a cut would be very unlikely as growth is expected to remain supported by consumer confidence and domestic demand. We are selling for a value of $10mn of CAD/NOK at 5.61 with a target of 5.35 and a stop at 5.75.”

Forex: EUR/JPY taking profit from 128.00 ahead of EMU sentiment and CPI

The EUR/JPY is at gains today, retracing yesterday’s losses that found a low at the 125.00 line. Today’s strength, based on both Yen weakness and EUR upside, has moved the cross to test the 128.00 handle on the European opening, where it failed to breach above. The market is currently easing to 127.30 area ahead of EMU ZEW survey and CPI data.
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Commodities Brief – Gold incurs largest ever daily decline, silver waylaid at 23.00 level

Gold experienced its largest one-time decline ever yesterday, driving the price below the 1400 level as gold bears rejoiced (1320 session low). The yellow metal proved has yet to truly bottom out, as the price is still highly unstable, after back-to-back sessions resulted in an all-out collapse. As of European trading Tuesday, the price of gold is now trading at USD $1361.20 per oz. The recent drop suggests that the sell-off could be exaggerated, and usually when the market witnesses such sell-offs, it leads to major volatility where correctional bounces can be strong and lengthy.
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