“The data we’ve seen in Canada so far has been bad data, but we haven’t really begun to see February data yet,” said Citigroup’s Anderson. “People will start to form their projections of numbers, and the numbers will come out and people will say hey, hold on, wait a minute, why do we have this big CAD short again?”
Canada’s economy grew 0.1% in January after shrinking 0.2% the month before, according to the median estimate of a Bloomberg survey of 24 economists before the government reports the data March 28.
The difference in the number of wagers by hedge funds and other large speculators on a decline in the Canadian dollar compared with those on a gain -- so-called net shorts -- was 65,331 on March 19, compared with net shorts of 53,397 a week earlier, data from the Washington-Based Commodity Futures Trading Commission showed. That was the most since March 2007.
The Canadian dollar gained earlier along with the currencies of fellow commodity exporters Australia and New Zealand as European officials disagreed on whether the financial rescues of Cyprus would act as a template for future bank bailouts.
“The Aussie, Kiwi and Canada have outperformed this week, and it may be there’s a bit of a refuge bid there for those currencies during this sort of uncertainty in Europe,” said Shaun Osborne, chief currency strategist at Toronto-Dominion Bank by phone from Toronto.
The Canadian dollar has gained 0.7% this week against nine other developed-nation currencies tracked by the Bloomberg Correlation-Weighted Index. The Australian dollar has gained 0.8% and the New Zealand currency has gained the most at 1.4%.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.