C$ extends retreat as crude prices fall

TORONTO: The Canadian dollar weakened against its US counterpart for the fourth straight session on Monday, hurt in large part by another slide in oil prices.

Crude prices, which had more than halved between June and January, retreated on worries of excess crude supply. US crude stocks, which are already at record highs, are expected to build in the coming months. The pace of the US rig count decline, which helped provide some price support, also was slowing. Canada is a major exporter of oil.

Earlier in the session, the currency's moves were also driven in part by news that Canada's Valeant Pharmaceuticals International Inc would acquire gastrointestinal drugmaker Salix Pharmaceuticals Ltd in an all-cash deal valued at about $10.1 billion.

"The market sees that there's a potential there of outflow from Canada going into the US I'm a bit more skeptical because most of Valeant's activities are in US dollars," said Charles St-Arnaud, senior economist and strategist at Nomura Securities in London.

"The biggest driver has probably been the decline in oil so far today."

At 9:28 a.m. ET (1428 GMT), the Canadian dollar was at C$1.2582 to the greenback, or 79.48 US cents, down from Friday's close of C$1.2546, or 79.71 US cents.

Looking ahead, investors will focus on a speech and press conference by Bank of Canada Governor Stephen Poloz on Tuesday for any guidance on whether the central bank will cut interest rates again at its rate announcement next week.

The bank stunned markets in January with an unexpected rate cut, and markets are currently pricing in an 81.7 percent chance of another cut when it announces its decision on March 4.

Investors will also be eying testimony by Federal Reserve Chair Janet Yellen on Tuesday, where she will deliver the US central bank's semi-annual monetary policy report to US lawmakers.

Canadian government bond prices were higher across the maturity curve, with the two-year up 2.5 Canadian cents to yield 0.388 percent and the benchmark 10-year up 25 Canadian cents to yield 1.397 percent.