TORONTO: The Canadian dollar was marginally softer on Monday against a rallying US dollar, which strengthened on expectations of positive US data this week that could prompt the Federal Reserve to make a decision on its monetary policy.
With little market-moving Canadian data until manufacturing sales on Friday, the Canadian dollar is expected to take its cues from US dollar moves.
"This is just a day of more universal US dollar strength," said David Tulk, chief Canada macro strategist at TD Securities.
Tulk said US retail sales and inflation data this week will be key indicators for a market that is trying to gauge the strength of the US consumer heading into the second half of the year.
"We have the impression that the fiscal drag would be most prominent in the first half. So we're trying to see, once we get beyond that, what underlying momentum exists in the economy," said Tulk.
The Canadian dollar, which was mostly outperforming other key currencies, was trading steadily around C$1.0304 versus the greenback, or 97.04 US cents at 9:21 a.m. (1321 GMT). This was marginally weaker than Friday's North American close at C$1.0294, or 97.14 US cents.
TD Securities expects the currency to trade within the highs and lows of today's session, between C$1.0280 and C$1.0317.
US retail sales data is expected on Tuesday while CPI data is due on Thursday.
Prices for Canadian government debt were mixed. The two-year bond lost half a Canadian cent to yield 1.136 percent, and the benchmark 10-year bond rose 2 Canadian cents to yield 2.478 percent.
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