The

Canadian dollar

is surging against the greenback again, but currency watchers say that should not be confused with strength despite traders unravelling their bets against the loonie.

“When you look at the Canadian dollar on a trade-weighted basis excluding the greenback, it has done nothing over the past two months and, in fact, has badly lagged against many currencies, including its commodity-exporting brethren in Australia and New Zealand,”

David Rosenberg

, president of Rosenberg Research & Associates Inc., said.

He said the Canadian dollar should be performing a lot better considering what the commodity markets have been doing, referencing historic prices for

gold

, silver and copper and, more recently, rising prices for

crude oil

.

The loonie is down 4.5 per cent this year against the Australian dollar and 3.5 per cent against the New Zealand dollar.

Rosenberg said the two Australasian countries have enough internal demand to sustain higher interest rates and have fostered the development of their resource sectors, and their closest trading ties are with Asia, where most of the world’s growth is occurring.

“Canada shares none of these attributes, sad to say,” Rosenberg said.

He also said

 

United States President

Donald Trump

‘s apparent loathing for Canada makes the

loonie

less attractive to investors.

“If you’re a global foreign exchange investor and you have a choice between two commodity currencies, Canada or Australia, you don’t have to have a degree in finance to know what the obvious choice is,” he said.

Shaun Osborne, chief currency strategist at Bank of Nova Scotia, said other distinctions between Australia and Canada include higher interest rates in the former and an Australian dollar that “is more connected to industrial metals,” while Canada’s currency is more closely tied to energy.

He also said the terms of trade in Australia — a measure of export prices to import prices — are stronger than in Canada.

“There’s a bit more leverage for the Australian dollar relative to metals prices,” he said.

Despite the Canadian dollar’s lagging performance against most other major currencies, investors appear to have cut it some slack by shifting from net short bets to net long bets for the first time since August 2023, according to Osborne.

Rather than a bet on the loonie, he attributed

 

this shift to a deteriorating view of the U.S. dollar as investors reappraise their exposure to the greenback.

The

U.S. dollar

index and the trade-weighted U.S. dollar index — two metrics of the greenback’s performance — are down 1.6 per cent and 1.3 per cent, respectively.

Those movements have been mirrored by the loonie, which fell below 72 cents U.S. in mid-January, but has since climbed back up and was testing the 74 cents U.S. level on Tuesday.

The trade-weighted index for the loonie, excluding the U.S. dollar, is down one per cent since the start of the year and down three per cent since the summer.

Osborne called the shift to net long “significant,” but said investors are not materially more bullish on the loonie.

“The shift in positioning that we’ve seen is relatively minimal,” he said. “I’d say it’s kind of a low-conviction endorsement of the Canadian dollar.”

Rosenberg said what’s more telling about the change in investor positioning is that long bets on the Australian dollar, Brazilian real and Mexican peso — all considered commodity currencies — far outpace those on the Canadian dollar.

For example, net long contracts on the Australian dollar totalled 26,000, while contracts for Canada were “flat.” Meanwhile, long contracts for the peso and the real were 90,000 and 31,000, respectively, Rosenberg said.

For 2026, the Australian dollar is the top pick of Monex Europe Ltd., a U.K.-based foreign exchange specialist.

“The aussie enters 2026 as one of our preferred long expressions in light of solid domestic fundamentals and exposure to Chinese growth,” Nick Rees, head of macro research at Monex, said in a global currency outlook, adding that Monex expected the Australian dollar to rise along with gold, due to its sensitivity to the precious metal.

“Why are we (Canada) so far behind our commodity competitors?” Rosenberg said.

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