TORONTO: The Canadian dollar dipped against its broadly stronger US counterpart on Monday as investors braced for a potential increase in US interest rates this summer, but some losses were pared as oil turned higher.
The greenback strengthened against a basket of major currencies after Federal Reserve Chair Janet Yellen said on Friday that a rate increase in the coming months "would be appropriate" if the economy and labor market continued to improve.
The market has been "leaning" toward long US dollar positions after Yellen's hawkish remarks, said David Bradley, director of foreign exchange trading at Scotiabank, who noted that trading was exceptionally light due to the US holiday.
Oil prices edged up toward $50 a barrel, although uncertainty ahead of a meeting on Thursday of the Organization of the Petroleum Exporting Countries was expected to cap gains, while Canadian production was set to restart after huge wildfires.
US crude futures rose 27 cents to $49.60.
The Canadian dollar ended at C$1.3051 to the greenback, or 76.62 US cents, slightly weaker than Friday's close of C$1.3038, or 76.70 US cents.
The currency's strongest level of the session was C$1.3025, while its weakest was C$1.3095.
Last week, the loonie touched a seven-week low of C$1.3188.
Speculators only modestly reduced bullish bets on the Canadian dollar despite recent wildfires in Alberta and hawkish comments from Fed officials, Commodity Futures Trading Commission data showed on Friday.
Statistics Canada released domestic data which had little market impact.
Canada's current account deficit widened to C$16.77 billion ($12.90 billion) in the first quarter from C$15.71 billion in the previous three months, while producer prices fell 0.5 percent in April.
Canadian government bond prices were mixed across a slightly flatter maturity curve, with the two-year price down 0.5 Canadian cent to yield 0.652 percent and the benchmark 10-year rising 5 Canadian cents to yield 1.353 percent.
Canada's gross domestic product data for the first quarter is awaited on Tuesday. Economic growth is expected to have picked up to a 2.9 percent annualized rate, rebounding from a weak fourth quarter as the country continues to grapple with the shock of cheaper oil.
But growth is forecast to have dipped for the second straight month in March, reinforcing the view that the economy cooled heading into the second quarter.
Comments
Comments are closed for this article.