Canadian Dollar

The Canadian Dollar sits in the middle of the pack at #5, scoring -14 — neither clearly strong nor weak. Interest rates are the main headwind. At around 2.3%, the Canadian Dollar pays far less than higher-yielding peers like the dollar or pound, which makes it less attractive to carry-seeking capital. Positioning is a clear headwind — speculative futures traders are heavily net-short the Canadian Dollar, among the most bearish readings in years. That adds selling pressure, though such crowded shorts can snap back quickly. Broader risk appetite is positive, which helps the Canadian Dollar. As a currency tied to global growth and trade activity, it tends to strengthen when investors feel confident and weaken when they retreat to safety. On the commodity side, firm prices for oil are providing a clear boost. Strong export revenues support the currency through the balance of payments and improve the terms of trade. Growth momentum has faded slightly, with the labour market showing early signs of cooling. The trend is negative — the score has dropped 7 points over recent weeks. On a valuation basis, it looks cheap versus its own one-year range, which may help cushion the downside from here.