An unwind was the story this quarter
We’re one quarter of the way through 2019 as today is the final trading day of March. What did we learn? The main thing was that markets overreacted in Q4. All the best trades this quarter have been unwinds of what happened then.
In FX, the top performer was the Canadian dollar. That’s not a big surprise given some strong jobs numbers, a rebound in oil prices and today’s GDP report. The laggard was the euro, which sagged on economic data and a dovish shift from the ECB.
EUR/CAD is down 4% in the quarter but looking at the quarterly EUR/CAD chart, we can see that the latest candle is merely a reversal of Q4.
What’s notable is that in Q4, the Canadian dollar was beaten up much. It fell 6% against the US dollar in Q4 and nearly 10% against the yen. So even though it had a great quarter, there is still a long ways to go to get back to where it was at the end of September.