Canadian dollar rises, investors expect China to reopen
The Canadian dollar strengthened against the U.S. currency. Investors expect that the easing of COVID restrictions in China will increase demand for oil, which is one of the main exports of Canada.
According to Adam Button, a chief currency analyst at ForexLive, markets are starting to take China's reopening more seriously. Button also noted that he does not expect the coming months to be easy. However, in his opinion, they will be followed by an increase in demand for oil, which may contribute to the strengthening of the Canadian currency.
As the world's leading importer of crude oil, China has faced an increase in the number of COVID-19 cases since the easing of mobility restrictions. Nevertheless, the government has announced its intention to strengthen its economic aid in the coming year.
At the same time, according to the U.S. Commodity Futures Trading Commission, speculators raised their bets against the Canadian currency to the highest level since October 2021. The number of net short positions increased from 22,090 to 27,248 contracts.
According to Button, Canada's housing market could pose a great danger in 2023. He also added that hawkish statements from the world's leading regulators suggest that the rate hike cycle will be longer than expected.
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