Hedge funds take largest bearish bet on Canadian dollar amid US tariff threats

Hedge funds have amassed the biggest short position on the Canadian dollar in nearly two years, holding a net 99,823 futures contracts that bet on a weaker loonie for the week ending 21 July, according to CFTC data cited by Bloomberg. The stance marks the strongest bearish exposure since August 2024 and follows a 0.5 % decline of the Canadian dollar against the U.S. dollar, its weakest weekly performance in five weeks.

The surge in bets comes as the Trump administration warned it could impose an additional 50 % tariff on select Canadian products, including alcohol, automobiles and dairy, heightening trade uncertainty. The tariff threat, combined with slower Canadian growth and a widening interest‑rate gap with the United States, has prompted investors to reduce exposure to Canadian assets while exporters may benefit from a cheaper currency.