Wall Street Analysts Weigh in on Latest NFP Data 
Kevin Warsh Advances Toward Fed Chair Role Amid Political Tensions 
Japan Inflation Expectations Rise as BOJ Rate Hike Timing Faces Uncertainty 
Bank of Japan's Ueda Flags Low Real Interest Rates as Key Factor in Rate Hike Timing 
Mexico's Undervalued Equity Market Offers Long-Term Investment Potential 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
Urban studies: Doing research when every city is different 
ECB Rate Outlook: Ceasefire Eases Pressure but Hikes Still Expected in 2026 
BOJ Rate Hike Expectations Grow as Board Member Signals Hawkish Stance 
US Gas Market Poised for Supercycle: Bernstein Analysts 
China's Refining Industry Faces Major Shakeup Amid Challenges 
CAD rates recently climbed above USD rates for the first time since 2014 (refer above graph) as the Canadian monetary policy to be more decisive than oil prices, and the USD rates projections can realistically drag the USDCAD to 1.20.
The oil performance has been instrumental in boosting the currency in 2017, even though the long-term picture suggests that the currency has overshot the rebound in oil prices.
However, the CAD is on the right track to remain strong: the interest rates factor is taking over from the commodity factor.
Solid growth to push the BoC on the hawkish side. Market pricing is currently similar for the BoC and the Fed, with the probability of two hikes in 2018 slightly above 30%. Indeed, the CAD has been boosted by the BoC's decision to raise rates to 1% in September, earlier than expected, on the back of a brighter-than-expected economic performance.
In our view, the market consensus is too gloomy on the drag to the Canadian economy from the housing market. While inflation has not yet reached the 2% target, growth indicators (consumer spending, employment) surprised on the upside, suggesting further monetary tightening (refer above graph) as Canadian real GDP is close to 3%.
CAD - cross vols are low and performing. CAD-based implied correlations are priced well below realizeds; owning CADUSD vs CADJPY corres itself or its vol spread proxy in the form of CADJPY – USDJPY vol spreads is a positive carry NAFTA hedge.
CAD-cross vols are also of interest as a potential buy given NAFTA risks in 2018, and CAD correlations that trade at a substantial discount to trailing realized corrs are well priced as carry friendly trade disruption hedges.
