USD/CAD: downside looks appealing risk/reward via put spread - Nomura

Analysts at Nomura explained the CAD has been affected by a wave of negative factors recently, particularly a heightened focus on the housing market.

Key Quotes:

"We continue to view the developments in one “alternative lender” (Home Capital Group) as not being indicative of the broader market. While there continues to be risks, expectations that the broader market is at a tipping point appear overblown."

"When combined with the firming outlook for oil prices and stretched negative market sentiment, we see attractive risk-reward in positioning for a USD/CAD retracement via downside option structures. We enter a USD/CAD 2m 1.34/1.31 put spread."