Goldman Sachs Group Inc. exited a bet that the Canadian dollar would strengthen versus the Mexican peso after the trade lost about 5 percent.
“Recent data points have gone against our fundamental views of continued stabilization in Canada and a lagging recovery in Mexico, relative to the global cycle,” analysts at Goldman Sachs wrote today in a note, citing worse-than-expected Canadian retail sales and jobs numbers, and a less-than-forecast drop in Mexican industrial production.
Goldman entered the trade on June 8, and stands to lose about 5 percent including the cost of carry after being “stopped out” when the peso traded beyond 11.40 per Canadian dollar yesterday, the researchers wrote. A long position refers to a bet that a currency will rise. Traders place “stops” on trades to automatically limit their losses.
The peso strengthened 0.5 percent to 11.34 per Canadian dollar at 12:44 p.m. in Toronto, from 11.40 yesterday. The peso has declined 1 percent this year against the loonie, nicknamed for the aquatic bird on the C$1 coin.
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