Canadian Dollar Strength

The Canadian Dollar is under pressure, ranking #7 of eight with a score of -21. Interest rates are the main headwind. At around 2.3%, the Canadian Dollar pays far less than higher-yielding peers like the dollar or pound, which makes it less attractive to carry-seeking capital. Positioning is a clear headwind — speculative futures traders are heavily net-short the Canadian Dollar, among the most bearish readings in years. That adds selling pressure, though such crowded shorts can snap back quickly. Weak oil prices are an additional drag. As a commodity-linked currency, the Canadian Dollar is sensitive to its export basket, and falling prices there erode the terms of trade. On a valuation basis, it looks cheap versus its own one-year range, which may help cushion the downside from here.