Speculators in IMM Canadian dollar futures cut their net-long positions by more than half in the period ended April 12, data from the Commodity Futures Trading Commission showed on Friday.
The net-long yen contracts grew for the third week in a row as speculators rebuild their positions after the end of the Japanese fiscal year on March 31.
The CFTC said the Commitments of Traders report reflected data through April 12 instead of its normal one week period which would have ended April 13 because of a data reporting problem at a large futures trader.
The data from the CFTC's Commitments of Traders report on speculative positioning are used by analysts as an indicator of future market direction.
For example, extreme net long speculative positions often signal a decline in the currency, especially if that position conflicts with the positioning of the more influential commercial players.
Speculators generally are trend followers seeking to pick a precise top or bottom in the market.
The net long position in Canadian dollars dropped from a one-year high of 41,865 contracts in the period ended April 6, to 17,150 contracts through April 12.
"They were cut back drastically. It was just an adjustment ahead of the Bank of Canada meeting and in line with the broad US dollar strength that we saw, that the commodity currencies were getting hit," said Lauren Germain, currency strategist at Bank of America in New York.
"But now that the bank of Canada is probably at the end of their easing cycle and a lot of bad news has been priced in at this point that there might be room for some new longs to be opened up," she said.
This big cut in net long Canadian dollar positions preceded the Bank of Canada's decision on Tuesday to cut interest rates by a quarter of a percentage point to 2 percent. This latest cut is seen in the market as the last in its current cycle.
Yen futures speculators added to their net-long positions for a third week in a row, with contracts now totalling 24,760, the highest since the week ended February 17, up from 20,388 contracts in the prior period.
Long euro futures contracts fell for the seventh consecutive week albeit modestly in the period ended April 12.
Long euro futures contracts now total 5,743, down from 6,017 the week before.