The Canadian dollar rose for a fifth day against its U.S. counterpart as oil, the country’s largest export, touched its highest point in a month, prompting investors to reverse near-record bets the currency will fall.
Canada’s dollar rose against the majority of its 16 most- traded peers as the discount Canadian oil producers face to the U.S. benchmark narrowed to the least in almost five months. The currency has gained since a report showed last week that bets by futures traders that the Canadian currency would fall versus the U.S. dollar outnumbered bets it would rise by the most in seven years. Inflation increased in February to 0.7 percent from 0.1 the prior month, according to a Bloomberg survey before tommorow’s report.
“It’s short covering, Canadian dollar short covering,” Greg Anderson, head of Group of 10 currency strategy at Citigroup Inc., said by phone from New York. “Everybody who’s short the Canadian dollar knows that everybody else is short the Canadian dollar, and it’s an uncomfortable spot to be in. So they try to slip out the back door, and I think that’s part of what’s behind Canadian dollar strength.” A short position is a bet an asset will decline in value.