2013.04.0202:58:41UTC+00Canadian Dollar near 5-week high as wagers on drop shrink

The Canadian dollar exchanged at almost a five-week high versus its U.S. counterpart as futures traders increased bets on the currency’s decline before data prediction to display a second straight month of job gains.

The loonie, as the currency is nicknamed, shift against the greenback after a report on manufacturing in the U.S., Canada’s biggest trading partner, trailed forecasts in March. The deficit in the amount of wagers by hedge funds and other huge speculators on a drop in the Canadian dollar compared to those on a progress -- so called net shorts -- was 62,645 March 26 from 65,331 the week before. Canada boosted 5,000 jobs in March, according to the median estimate of a Bloomberg survey of 23 economists.

“There was a lot of down pressure on the loonie early in March and we’ve seen a bit of a lift in the loonie in the last couple of weeks and part of that has been driven by people covering their short positions,” said David Doyle, a strategist at Macquarie Capital Markets by phone from Toronto. “My overall thesis is that we trade down, because some of this up-move has been driven by short covering. The fact that’s taken place should give guys increased confidence that the next leg down is the next step.”

The loonie moved forward with 0.1 percent at C$1.0168 per U.S. dollar at 5 p.m. in Toronto. The currency hits C$1.0146 per U.S. dollar March 28, the strongest level since Feb. 20. One loonie purchases 98.35 U.S. cents.

Bond Trades

Canada’s standard 10-year government bonds soars, kicking the yield down two basis points, or 0.02 percentage point, to 1.85 percent. The 1.5 percent coupon maturing in June 2023 acquired 22 cents to C$96.81.

Futures of crude oil, the country’s biggest export surrenders 0.3 percent to $96.93 per barrel. The Standard & Poor’s 500 Index of U.S. stocks gave up 0.5 percent.

A quarterly report from the International Monetary Fund indicated that central banks hikes holdings of the Canadian dollar in the fourth quarter of 2012, according to the Bank of Nova Scotia.

Central bank holdings of currencies other than the yen, the euro, the British pound, the U.S. dollar and the Swiss franc which includes the Canadian and Australian dollars, upgrades 6.1 percent to $372 billion, according to the bank.