TORONTO: The Canadian dollar ended 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 loonie, as Canada's currency is colloquially known, barely moved against a range of other currencies amid a dearth of domestic catalysts.
"It's a quiet start to the week, very little in the way of data," said Matt Perrier, managing director of foreign exchange sales at BMO Capital Markets. "It's well within the established range of the summer. It's not at its strongest and it's well off its weakest point."
The Canadian dollar ended the session at C$1.0303 to the greenback, or 97.06 US cents. It closed last week at C$1.0294, or 97.14 US cents.
BMO's Perrier said the trade in the currency would get more interesting if it approaches either the late-July low of C$1.0245, or C$1.0445, which it failed to breach in early August.
US retail sales data is expected on Tuesday while CPI data is due on Thursday.
Prices of Canadian government debt were lower. The two-year bond lost 3 Canadian cents to yield 1.149 percent, and the benchmark 10-year bond fell 42 Canadian cents to yield 2.531 percent.
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