C$ bets turn bullish for first time since May last year

TORONTO, April 8 (Reuters) - Speculators have turned bullish on the Canadian dollar for the first time since May last year, Commodity Futures Trading Commission (CFTC) data showed on Friday

Net long Canadian dollar positions stood at 97 contracts in the week ended April 5, swinging from net short 6,180 contracts in the prior week. At the end of January, net short exposure was the largest in five months at 66,819 contracts.

The currency has rebounded 13 percent since hitting a 12-year low at C$1.4689 in January, supported by a partial recovery in oil prices, the Canadian government’s plan for fiscal stimulus and sharply reduced expectations for Bank of Canada rate cuts.

The currency approached last week a key resistance level at C$1.2832, its strongest since the Bank of Canada last cut interest rates in July.

“If we take that level out then I think you might see these contracts get even further into net long territory,” said Mazen Issa, senior fx strategist at TD Securities.

The Bank of Canada cut interest rates twice last year to offset the oil price shock, but has held steady so far in 2016. The implied probability for a rate cut this year has collapsed to 12 percent from above 50 percent a little more than one month ago.

Meanwhile, the prospects of U.S. interest rate hikes have diminished after Federal Reserve Chair Janet Yellen surprised markets last week with her cautious stance.

Recent firm economic data pointing to growth above 3 percent for the first quarter has added to support for the Canadian dollar, said Issa.

The CFTC data reflects speculators’ positions before the release of much stronger than expected jobs data on Friday.

Canada’s economy created 40,600 jobs in March, far surpassing economists’ expectations for 10,000, and driven by a 35,300 increase in full-time jobs. (Reporting by Fergal Smith; Editing by Chizu Nomiyama)