Canadian dollar jumps as speculators turn net long for the first time in two and a half years
The Canadian dollar (CADUSD) strengthened to a 10-day high on Monday against its U.S. counterpart, which posted broad declines, after data showed that speculators were net-bullish on the loonie for the first time in two and a half years.
The Canadian dollar was trading 0.8% higher at 1.3565 per U.S. dollar, or 73.72 U.S. cents, after touching its strongest intraday level since January 30 at 1.3560.
“The loonie is finding support from resilient January labour market data,” said Tony Valente, senior FX dealer at AscendantFX. Canada unexpectedly lost 24,800 jobs in January but the losses were all part-time, and the unemployment rate dipped to a 16-month low of 6.5%, data on Friday showed. The data is unlikely to encourage the Bank of Canada to cut interest rates further, analysts say.
“Broader USD softness is also contributing to the move, with speculative positioning turning increasingly bearish on the USD,” Valente said. The U.S. dollar fell against a basket of major currencies following a report that Chinese regulators have advised financial institutions to curb their exposure to U.S. Treasury bonds.
Speculative positioning has turned net-long the Canadian dollar for the first time since August 2023, data from the U.S. Commodity Futures Trading Commission showed on Friday. Non-commercial net-long positions stood at 2,130 contracts as of February 3, swinging from net-short 16,046 contracts in the week before.
“The details revealed a notable liquidation of bearish gross shorts as gross longs were left largely unchanged,” Shaun Osborne, chief currency strategist at Scotiabank, said in a note. “Historically, most of the CAD’s most meaningful positioning adjustments have been confined to the bearish side of the ledger. However, the latest few reports have revealed a meaningful build in gross longs since early December.”
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The price of oil, one of Canada’s major exports, rose 1.4% on Monday to $64.44 a barrel on renewed concerns that tensions between the U.S. and Iran could lead to oil supply disruptions.
Canadian bond yields edged lower across the curve, with the 10-year down 1.6 basis points at 3.394%.
With a contribution from Globe staff
