Deutsche Bank - "Given our bullish USD view for the rest of the year, we’re turning bearish EUR/USD. Even if Fed QE continues throughout 2013, US 2-year yields will turn up this summer and there’s little additional good news that can be priced into the euro. EUR/USD should lag broad dollar moves however, as the Euro-area’s external accounts look good, suggesting most EUR-crosses are likely to hold up. We’re looking for 1.20 over the course of H2.
(...) For the last three years, the market assumption has been that the Canadian economy is a "high beta" version of the US. With such close ties, the thinking goes, CAD will perform well as the US picks up steam. There are four reasons why this notion could be challenged this year. USD/CAD could end up being one of the best long dollar trades over the next twelve months.
(1) Short CAD is the world's best valuation trade
(2) Canada's current account dynamics look terrible
(3) Bank of Canada will lag, not lead Fed re-pricing
(4) Portfolio inflows exceptionally vulnerable"