OTTAWA: The Canadian dollar was little changed against the greenback on Monday and was expected to trade in a tight range this week, with the currency on track to close out its worst year since 2008.
Investors were keeping an eye on developments in Greece as it heads toward an early general election next month after parliament rejected the prime minister's nominee for president, casting some doubt on the country's international bailout.
While the events did not spark much reaction in the loonie, markets could see some increased risk aversion next week when trading desks are fully staffed and as the Greek election draws nearer, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
"As of right now, the Greek concern has been fairly localized," Smith said.
The Canadian dollar ended the North American session at C$1.1629 to the greenback, or 85.99 US cents, slightly weaker than last Wednesday's official Bank of Canada close of C$1.1623, or 86.04 US cents. Markets were closed at the end of last week for the Christmas and Boxing Day holidays.
The currency is likely to stick to a range between the high C$1.15s and high C$1.16s this week, said Smith.
The Canadian dollar is down 8.8 percent for 2014, its weakest performance since 2008, which was the onset of the global financial crisis.
Diverging monetary policy between Canada and the United States, lackluster domestic economic growth and a plunge in oil prices have all weighed heavily on the currency. Analysts expect it will fall further in 2015.
"The main themes of 2014 were oil, the economy and interest rates and those are the main catalysts for the US dollar-Canadian dollar moving forward," said Rahim Madhavji, president of KnightsbridgeFX.com in Toronto.
Canadian government bond prices were higher across the maturity curve, with the two-year up 4-1/2 Canadian cents to yield 1.036 percent and the benchmark 10-year up 68 Canadian cents to yield 1.835 percent.
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