"The USDCAD thrill ride persists. Notably, we are now back above 1.33 following the overnight dip to a low near 1.3280.

We still see scope for continued CAD underperformance given the BoC rate cut theme has further room to run. The shift in rate differentials has seen our USDCAD equation inch higher, suggesting it is slightly overvalued. We see strong resistance ahead of 1.34 (upper end of our valuation band) so would look to fade there. Consistent with the weaker CAD theme in the majors we also like EURCAD higher.

Market positioning has seen a notable shift over the past few months. The USD is now flat after reaching record shorts earlier in the year. This change in positioning reflects in markets focus on December rate hike, diminished political uncertainty in the US (and possible fiscal support) and a potential drop in FX reserves from countries like China that have recently seen a drop in reserve flows. The latter could reflect a drawdown in other major currencies for the greenback.

...We think this leaves the USD confined to its recent range but are cautious about chasing the rally at current levels. Our highfrequency models favor some upside in European currencies as both SEK and GBP look cheap.

We also like to think there is value in long EUR positions near 1.08".

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