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A Hot Trade in the Great White North

Canadian flag
Terry J Alcorn | iStock Exclusive | Getty Images
Canadian flag

Blockbuster job numbers and a hawkish central bank will lift the loonie (Canada's dollar), this strategist says.

When Canada reported job growth of over 82,000, more than eight times economists' forecasts, the market took notice - but a lackluster employment report from the U.S. the next day dampened enthusiasm.

Amelia Bourdeau, director of foreign exchange at Westpac Institutional Bank, thinks the caution is overdone, and she told CNBC's Melissa Lee she wants to be ready when the Bank of Canada meets April 17 and 18.

"The Bank of Canada isn't yet ready to hike its policy rate because the need to see what employment in the U.S. is going to do going forward," she says, since Canada's economy is so closely tied to its southern neighbor's. "However, I think the Bank of Canada will be hawkish in its policy statement next week."

That prospect, combined with the excellent jobs report, are making Bourdeau bullish on Canada - especially compared to Europe, where she sees "further problems and event risk coming up" and investors are already worried about Spain.

Bourdeau wants to buy the Canadian dollar against the euro, entering the trade right around 1.3080 with a stop at 1.3170 and a target of 1.2770.