Speculators have reversed bets that helped make the Canadian dollar the worst performer in the developed world, with sentiment swinging in the currency’s favor for the first time in 16 months as inflation quickens.
Futures wagers by hedge funds and other large speculators for the Canadian dollar to rise against its U.S. peer, or net longs, outnumbered bets for it to fall last week for the first time since Feb. 22, 2013, according to July 4 data from the Commodity Futures Trading Commission in Washington. As recently as January, net shorts outnumbered net longs by 70,327 positions, approaching the most since 2007.
The Canadian dollar touched a 4 1/2 year low in March as Bank of Canada Governor Stephen Poloz said he couldn’t rule out interest-rate cuts to head off the dangers of low inflation. With the latest consumer-price index rising above the central bank’s target for the first time in more than two years, speculation is growing Poloz may change his stance.
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