Speculators Unload on Loonie Ahead of Trump Tariffs
Currency speculators have taken out their largest bearish position against the Canadian dollar, driving it to a 14-month low. The net short positions held by non-commercial accounts reached US$12.5 billion in the latest weekly data from the US Commodity Futures Trading Commission.
This is the highest reading among currencies traded on the Chicago Mercantile Exchange and the biggest wager against the loonie since December 2024. Leveraged money managers held 99,823 contracts tied to a weaker currency in the week ending July 21.
Investors expect the Bank of Canada to hold its benchmark rate at 2.25 percent in the coming months even as they raise bets on tighter Federal Reserve policy. The gap between Canada's two-year yield and its US equivalent has widened to 144 basis points in favor of the US note, the widest since May 2025.
Some analysts predict that this bearish positioning will continue before August 19, when US President Donald Trump confirmed that 50 percent tariffs on a wide range of goods would take effect. Others see little on the other side of the trade, with Canadian dollar bulls having 'not a lot to hang your hat on.'