The Canadian dollar rose against the greenback on Friday and posted its longest streak of weekly gains since 2016, as speculative bets on the currency climbed and investors shook off the Bank of Canada’s concern that further strength could hurt the economy.
The loonie was trading 0.4% higher at 1.2109 to the greenback, or 82.58 U.S. cents and was up 0.2% for the week, its seventh straight weekly advance. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies.
Speculators have raised their bullish bets on the Canadian dollar to the highest since November 2019, data from the U.S. Commodity Futures Trading Commission showed. As of May 11, net long positions had increased to 38,629 contracts from 25,947 in the prior week.
If the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy, BoC Governor Tiff Macklem said on Thursday.
“The market had a little bit of time to think about exactly what the Bank of Canada Governor was saying yesterday and they realized that the fundamentals behind what’s driving prices right now hasn’t changed,” said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets.
Some of the commodities that Canada produces, including copper and oil, have surged this year as the global economy recovers from the coronavirus crisis.
U.S. crude oil futures settled 2.4% higher on Friday at $65.37 a barrel, reversing some of the previous day’s sharp losses as stock markets strengthened and the U.S. dollar slipped.
Domestic data for March showed that factory sales rose 3.5% and wholesale trade was up 2.8%.
Canada’s 10-year yield was little changed at 1.559%. On Thursday, it touched its highest intraday level in eight weeks at 1.624%.
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