Canada's Currency Suffers Most Heavily Under Market Betting

The Canadian dollar has reached a milestone no country wants, it is now the most heavily shorted major currency in the world. This comes as Canada continues to struggle with trade uncertainty, failing to reach new understandings with the United States like other countries have.

This situation was highlighted by Prime Minister Mark Carney's speech at the World Economic Forum in Davos, where he stated that 'If we're not at the table, we're on the menu.' This means that countries which help write the rules benefit from them, while those who don't are left reacting to decisions made by others.

The financial markets have been making a decision of their own, they are betting against the Canadian dollar. Over the last 7 months, traders have built one of the largest short positions against the currency, risking billions of dollars. This is not because Canada's economy is failing, but rather that the market believes the Canadian dollar will buy less in the future.

The reason for this is largely due to the lack of action from the Bank of Canada. Unlike other central banks which have raised interest rates to defend their currencies, the Bank of Canada has left its benchmark rate at 2.25%, allowing the Canadian dollar to continue drifting lower.