The Canadian Dollar had a quite lively, and ultimately pretty good week as the incoming economic data swung around from disappointing GDP to quite decent employment numbers. From a high on Wednesday of USD/CAD1.2905, the CAD gained strength throughout the week to hit a low immediately after the employment data of 1.2734; its best level in almost 10 days.
The weekly data published by the CFTC show that investors have been running net long Canadian dollar positions since the beginning of May. So-called ‘speculative longs’ peaked at 98,079 contracts in the week of October 10th and the latest numbers published over the weekend show they have only been very gradually scaled back to 72,097 contracts.
Investors are clearly rattled by the sharp slowdown in the Canadian economy since the BoC’s two surprise interest rate hikes, but these concerns have been offset somewhat by firmer oil prices which are a benefit to its shale oil producers. BoC Governor Stephen Poloz is scheduled to give a speech Tuesday on “Central Banks’ ability to understand inflation”, though we’d humbly suggest the easiest way right now is to drive past a gas station and look at the price..