Canadian dollar up for 8th straight week as speculative buying climbs

·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Friday as encouraging U.S. factory data boosted the greenback, with the loonie adding to a streak of weekly gains and staying in reach of a six-year high.

Speculators have raised their bullish bets on the Canadian dollar to the highest since November 2019, data from the U.S. Commodity Futures Trading Commission (CFTC) showed. As of May 18, net long positions had increased to 46,112 contracts from 38,629 in the prior week.

The Canadian dollar was trading nearly unchanged at 1.2055 to the greenback, or 82.95 U.S. cents, having traded in a range of 1.2027 to 1.2094. For the week, it was up 0.4%, the eighth consecutive week it has advanced, which is the longest streak since 2016.

On Tuesday, the loonie touched its strongest level since May 2015 at 1.2013, bolstered by the recent surge in prices for some of the commodities that Canada produces on prospects for global economic recovery.

The reaction of markets, including bonds and copper, to the U.S. data "came to the rescue for USDCAD," said Erik Bregar, head of FX strategy at Exchange Bank of Canada.

Copper fell 1.5% and the U.S. dollar gained ground against a basket of major currencies after data showed U.S. factory activity gathering speed in early May.

Investors have worried that the heating up of the U.S. economy could raise the outlook for inflation, prompting the Federal Reserve to tighten monetary policy.

Canadian retail sales plunged by 5.1% in April when pandemic-related restrictions were tightened, a preliminary estimate from Statistics Canada showed.

The price of oil, one of Canada's major exports, settled 2.7% higher at $63.58 a barrel as a storm formed in the Gulf of Mexico, threatening production.

Canada's 10-year bond was nearly unchanged at 1.543%.

(Reporting by Fergal Smith; editing by Jonathan Oatis and Nick Zieminski)