Loonie Looks for Gains Against Greenback

Speculators taking short positions on the loonie against the greenback are starting to capitulate a little bit. With inflation picking up in Canada, there is interest in what policymakers will do next, and some think that action will include some sort of interest rate hike, or some other mechanism to slow inflation.

Late last week, Statistics Canada released a report on consumer prices, showing that the annual rate of inflation picked up to 2.3 per cent for the month of May. While the Bank of Canada has given no guidance on when it might hike interest rates, or what else might happen, there are some who think that this news necessitates a change in course for Stephen Poloz and the BOC.
However, there are still speculators holding on to their short bets on the loonie, and that is weighing on the currency a bit. There are signs that some are capitulating, though. The economic data coming out of Canada lately has been such that it’s hard to keep holding to the short bet.
Also helping are rising oil prices, even though oil is lower today.
At 1:34 GMT USD/CAD is down to 1.0730 from the open at 1.0731. EUR/CAD is up to 1.4617 from the open at 1.4600. GBP/CAD is down to 1.8242 from the open at 1.8272.

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