Morgan Stanley riding the USD/CAD trade to the moon via ForexLive

Morgan Stanley are currently up 832 pips on a long from 1.1810 placed 9th Jan

They cited two reasons for the trade, and one against, at the time;

1. While the immediate, first-round impact of falling oil prices has been felt by CAD, we do not think this pair has appreciated enough to reflect key second-round effects of lower crude.
2. The terms-of-trade shock has had an immediate effect in reducing national income, yet shocks to the labour market, investment, and bank health have not seeped through yet. While markets are not pricing in a BoC hike until late 2016, there are enough negative factors, in our view, that would lead the market to push out tightening expectations into 2017, weighing on CAD, we believe.
3. A key risk to this trade is a rebound in crude prices which would be supportive for CAD

They are looking for a target of 1.3000 and their stop is at 1.2000. They are also orders in to add a long at 1.2460 if we drop back there. They have the same target but a tighter stop at 1.2360.

They'll be fighting it out for a fill with Credit Suisse who want a technical long at 1.2455. CS are keeping that one tight too with a 1.2380 stop and 1.2695 target

A very nice trade for Morgans and just shows what can happen when you do catch a surprise move the right way

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posted via ForexLive