TORONTO: The Canadian dollar was little changed on Monday and was expected to stay within its recent trading range in a session made quiet by the US Memorial Day holiday.
So far in May, the Canadian dollar has largely moved sideways as analysts weigh generally improving economic data against the Bank of Canada's neutral policy stance. The central bank shifted away from its hawkish bias last October, pressuring the loonie.
Analysts say the currency could be hemmed in until there is either a change in the Bank of Canada's tone or a breakout in the US dollar as economic recovery south of the border takes hold. Market focus is starting to turn to the Bank of Canada's next policy statement, which will be issued next week.
Volumes on Monday were muted with US markets closed for Memorial Day, while markets in London were also closed.
"We're definitely looking at some icy cold trading conditions with London and New York being closed today," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.
The Canadian dollar was at C$1.0864 to the greenback, or 92.05 US cents, slightly stronger than Friday's close of C$1.0870, or 92.00 US cents.
The loonie is likely to trade between C$1.09 and C$1.0830 to C$1.0840 for the session, Smith said.
The euro was little changed against the Canadian dollar as investors took in the results of European Parliament elections. While Euroskeptic nationalists racked up victories in France and Britain, pro-European forces held firm in Germany and Italy.
"Right now, we're not a point where we're going to see the EU blow up or there's going to be any major changes in the extremely near term," Smith said. "The one surprising thing is that the surge in anti-EU parties acts as a warning shot to the status quo in the European zone right now."
The euro was trading at C$1.4815.
Canadian government bond prices were mostly higher across the maturity curve, with the two-year up 0.3 of a Canadian cent to yield 1.052 percent and the benchmark 10-year up 3 Canadian cents to yield 2.303 percent.
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