AUD/CAD started to bottom out and longs look attractive – TD

There’s plenty of talk about undervaluation in AUD today given the bounce in iron ore prices. TD Research discusses that pair and expectations for this week’s BoC policy meeting.

“The June BoC Announcement should be a relatively quiet affair.
Despite a weaker than expected Q1, look for the Bank to argue that the
outlook is unfolding roughly in-line with their April forecast. We
expect the forward-looking passage to signal 2022H2 rate hikes, and we
do not expect any change in QE at this meeting,” TD notes. 

“We think the risks skew negative into this week’s BoC
meeting. We think AUDCAD has started to bottom out and it remains one of
the best expressions of G10 central bank mispricing and possible
convergence,” TD adds.

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