And so it was that Canada (“O’ Canada!“) stole the North American econ show on Friday when, just as the US was busy missing on both GDP and, probably more importantly, on ECI, our friends north of the border reported the strongest y/y economic growth since the turn of the millennium.
Needless to say, that sent the loonie surging:
What you see there was the biggest drop for USDCAD in two weeks and it was supercharged by strength in oil prices.
For those who haven’t kept up with this truly epic “loonie tune”, this is just the latest chapter in a long and painful story for CAD shorts. The spec net short position hit a record in May and since then, here’s what USDCAD has done:
“[Today’s] data reinforced expectations that the Bank of Canada will hike again in October after raising rates 25bps on July 12,” Bloomberg notes.
Again, you are encouraged to trace this story back a few weeks and indeed, these two posts were pretty damn popular as far as stories about the loonie go:
- Horrific Loonie Short Disappears As Bears Frantically Covered Into Rate Hike
- Loonie Tunes: Closing The Book On A Short Gone Horribly Wrong
You can read those for yourself, but suffice to say the latest CFTC data (out tonight and current through Tuesday as usual) shows specs extended their newly built net long in CAD by 19K contracts and as you can see from the second chart shown above, they were rewarded.
(Goldman)
So for the third week in a row we get to say “congratulations Canada!”
Now just hope that epic housing bubble doesn’t burst.
*****
