TORONTO: The Canadian dollar edged lower against its US counterpart on Monday as the greenback broadly gained, but the loonie held near last week's eight-month high ahead of an interest rate decision on Wednesday from the Bank of Canada.
The US dollar hovered at a three-week high against a basket of major currencies as traders awaited Fed Chairman Jerome Powell's testimony this week before Congress for clues about a rate decrease.
"The reason the dollar is up against most majors, the Canadian dollar in particular, is just that there are these concerns about what Fed Chairman Powell will say this week," said Alfonso Esparza, senior currency analyst at OANDA.
Data on Friday showing a stronger-than-expected increase in US jobs in June has scaled back traders' expectations of a sharp Fed rate cut at the end of July.
The currency, which on Thursday touched its strongest since Oct. 25, last year at 1.3038, traded in a range of 1.3050 to 1.3100.
Canada's employment report was also released on Friday. It showed that wages jumped in June by the most in more than a year - a sign of strength analysts said ruled out the chances of the Bank of Canada cutting interest rates this week.
The central bank will keep its key interest rate on hold at 1.75pc through to the end of next year at least, according to a Reuters poll, diverging from expected easing from the US Federal Reserve.
The gap between Canada's 2-year yield and its US counterpart narrowed by 4.6 basis points to a spread of 20.4 basis points in favor of the US bond, its smallest gap since January 2018.
The price of oil, one of Canada's major exports, was supported by tensions over Iran's nuclear program but gains were tempered by global economic growth concerns.
US crude oil futures settled 0.3pc higher at $57.66 a barrel?Reuters
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