USD: BNP bank is betting on hawkish turning point at tonight's Fed meeting, recommends buying USD against AUD and CAD

In an analysis published this morning, BNP Paribas notes that the rate markets increasingly appear to warn of a hawkish turning point during tonight's Fed meeting.

"The USD is losing ground to the funding currencies. Price action is reinforcing our bullish preference for the USD against commodity-linked currencies such as the AUD and CAD.

Furthermore, we expect downside risks on these currencies, which ultimately indicates that we prefer to sell the AUD/USD and buy the USD/CAD."

For the record, BNP Paribas holds a long position on the USD/CAD opened at 1.2665, with a target of 1.33 and a stop at 1.26096.