CAD: Sell in June (not May) – RBC CM

By FXStreet Research Team at RBC Capital Markets, notes that the foreign investors have been strong buyers of Canadian bonds in 2016 so far, reducing Canada’s reliance on short-term inflows and supporting CAD.

Key Quotes

“History suggests a strong reversal in June. A large cash flow due to the concentration of redemptions is unlikely to be fully reinvested, and a bout of CAD weakness on key crosses is a phenomenon frequently seen in June.

A strong correction higher in AUD/CAD would be an opportunity to put on core shorts.

Shorter-term, one-month CAD puts against AUD or EUR would be vehicles to play, or hedge against, a short-term reversal of CAD’s outperformance in 2016.”
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Source:: FX Street