C$ bets turn bullish for first time since May last year

By Fergal Smith
TORONTO, April 8 (Reuters) - Speculators have turned bullish
on the Canadian dollar for the first time since May last year,
Commodity Futures Trading Commission (CFTC) data showed on
Friday
Net long Canadian dollar positions stood at 97 contracts in
the week ended April 5, swinging from net short 6,180 contracts
in the prior week. At the end of January, net short exposure was
the largest in five months at 66,819 contracts.
The currency has rebounded 13 percent since hitting a
12-year low at C$1.4689 in January, supported by a partial
recovery in oil prices, the Canadian government's plan for
fiscal stimulus and sharply reduced expectations for Bank of
Canada rate cuts.
The currency approached last week a key resistance level at
C$1.2832, its strongest since the Bank of Canada last cut
interest rates in July.
"If we take that level out then I think you might see these
contracts get even further into net long territory," said Mazen
Issa, senior fx strategist at TD Securities.
The Bank of Canada cut interest rates twice last year to
offset the oil price shock, but has held steady so far in 2016.
The implied probability for a rate cut this year has collapsed
to 12 percent from above 50 percent a little more than one month
ago. BOCWATCH
Meanwhile, the prospects of U.S. interest rate hikes have
diminished after Federal Reserve Chair Janet Yellen surprised
markets last week with her cautious stance.
Recent firm economic data pointing to growth above 3 percent
for the first quarter has added to support for the Canadian
dollar, said Issa.
The CFTC data reflects speculators' positions before the
release of much stronger than expected jobs data on Friday.
Canada's economy created 40,600 jobs in March, far
surpassing economists' expectations for 10,000, and driven by a
35,300 increase in full-time jobs.