TORONTO: The Canadian dollar strengthened against its US counterpart on Monday after the French election result boosted investors' appetite for risk and also as data showed domestic wholesale trade fell less than expected.
Euro zone stock indexes were headed for their best day in almost two years after the market's favored candidate won the first round of the French election. That reduced the risk of another shock like 'Brexit,' Britain's impending exit from the European Union, that could weigh on the global economic outlook.
Canada's commodity-linked currency tends to benefit from improved economic sentiment.
Canadian wholesale trade declined in February after four months of gains amid weakness in the household goods and food sectors, data from Statistics Canada showed.
The 0.2 percent decrease was not as steep as the 1.0 percent decline economists had forecast. Sales volumes fell 0.4 percent.
At 9:18 a.m. ET (1318 GMT), the Canadian dollar was trading at C$1.3456 to the greenback, or 74.32 US cents, stronger than Friday's close of C$1.3503, or 73.91 US cents.
The currency's weakest level of the session was C$1.3500, while it touched its strongest since April 19 at C$1.3410.
Last week, the loonie fell 1.3 percent, pressured by cooler-than-expected domestic inflation and a slide in prices for oil, one of the country's main exports.
US crude prices were down 0.14 percent at $49.55 a barrel on Monday as a rise in US drilling offset expectations that the Organization of the Petroleum Exporting Countries will extend output cuts till the end of 2017.
Speculators have increased bearish bets on the Canadian dollar to the most since February 2016, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian dollar net short positions increased to 33,252 contracts as of April 18 from 32,334 a week earlier.
Canadian government bond prices were lower across the yield curve as the French vote reduced demand for safe-haven government bonds.
Bank of Canada Governor Stephen Poloz said on Saturday he was happy that Ontario had brought in new measures to tackle the Toronto housing market, saying a foreign buyers tax should help dampen demand and impact the psychology of speculators.
Canadian retail sales data for February is due on Wednesday.
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