A magnetic head that includes a spin valve sensor of the present invention which may be a CIP or CPP device. The sensor includes a free magnetic layer that is comprised of CoFeCu. In certain embodiments the free magnetic layer may also include a sublayer of NiFe. The CoFeCu free magnetic layer preferably includes Fe in a range of 5-20 at. % and Cu in a range of 1-10 at. %. The sensor may also include a cap layer of the present invention that is comprised of ZnO.sub.x/TaO.sub.x. The CoFeCu free magnetic layer of the present invention provides improved sensor performance characteristics of reduced coercivity and generally similar GMR as compared to the prior art. Where the ZnO.sub.x/TaO.sub.x cap layer is utilized, increased GMR is obtained. Thus a magnetic head of the present invention that includes both a CoFeCu free magnetic layer and a ZnO.sub.x/TaO.sub.x cap layer demonstrates reduced coercivity and increased GMR.