BUZZ-COMMENT-Traders view currencies most threatened by Trump very differently
Feb 25 (Reuters) - Traders view the currencies most threatened by U.S. President Donald Trump very differently with many betting that Canada's dollar drops, while a few still expect Mexico's peso to rise.
Wagers against the loonie grew to a record $14 billion, almost doubling the prior record wager, and at $10 billion, they are still the largest currency bet in existence.
In stark contrast, although traders have pared their bets on Mexico's peso rising, they are yet to bet against it in a significant fashion.
The level of proposed tariffs is the same for both countries, so the disparity is intriguing and suggests the peso's suffering will be far more acute if traders and investors are forced to adjust.
The drag of existing bets on any drop for Canada's dollar is significant and should the outcome of the current dispute be less punitive than feared, the reduction of short positions could fuel a sizeable recovery.
That said, any concession made by Canada and Mexico to appease Trump will probably encourage him to use the same tactics again.
Both USD/CAD and USD/MXN are in the grip of strong uptrends that carry a very real risk of moves to multi-year highs for both pairs during a period that naturally underpins the world's reserve currency.
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