Hedge Funds Hold Biggest Short on Canadian Dollar Since Aug 2024

Leveraged money managers held a net 99,823 futures contracts betting on a weaker Canadian dollar in the week ending July 21, the largest bearish position on the currency since August 2024. The data come from the Commodity Futures Trading Commission (CFTC) reporting for that week.

The increase in short positions coincided with the Canadian dollar’s roughly 0.5% decline against the U.S. dollar that week, the currency’s weakest weekly performance in five weeks.

The rise in bearish bets followed a pledge by the U.S. administration to impose an additional 50% tariff on certain Canadian goods, citing what it described as unfair treatment of U.S. alcohol, automotive and dairy products. The tariff announcement contributed to market concerns about U.S.-Canada trade relations.

Macro hedge funds have cited a mix of tariff uncertainty, signs of weakness in the Canadian economy and an interest-rate gap that favors the U.S. dollar when shifting positions. Those factors have weighed on demand for the Canadian dollar and are reflected in the speculative shorting recorded in the CFTC data.

CFTC reports measure net positions in futures contracts held by leveraged money managers, a group that includes hedge funds and other speculative traders. Large net short readings represent a concentration of bets that the currency will weaken and can heighten volatility if positions are adjusted quickly.

Market participants are watching whether tariff rhetoric leads to sustained changes in trade ties or if negotiations and policy moves reduce tensions. Future shifts in interest-rate expectations, Canadian economic data and trade announcements are likely to influence hedge fund positioning and the Canadian dollar’s direction in coming weeks.