Speculators have had a huge bearish about face on the Canadian dollar; Scotiabank reports it’s one of the largest ever shifts in sentiment.
Currency Futures Trading reports showed a net short position, speculators betting against the loonie of $1.8-billion U.S., a wrenching swing from a net long, or speculators betting for the dollar of $1.6-billion a week earlier.
One of the currency’s most noted analysts, Charles St-Arnaud of Nomura Securities thinks that the Canadian dollar is a proxy for oil, noting prices for crude have dropped significantly in the last two weeks.
And there’s good reason to be bearish on the loonie: from the uncertainty over oil prices and the possible negative impact of Trump trade policies, but most importantly, the different interest rate paths of the Fed and the Bank of Canada.
It may not be ‘look out below,’ but great caution continues for Canadian dollar bulls.