TORONTO: The Canadian dollar was softer against its US counterpart on Monday, tracking weaker oil prices, and with little else on the domestic calendar this week, the currency is expected to take its cues from external drivers.
The commodities-linked Canadian dollar has been moving closer in tandem with the price of crude, a major Canadian export, and prices have slumped to four-year lows recently on concerns of an oil glut.
Brent crude fell on Monday after Japan, the world's fourth-biggest crude importer, slipped into recession and as Saudi Arabia reiterated the oil price should be left to supply and demand.
Currency watchers have noted the Canadian dollar has otherwise performed reasonably well against the greenback relative to other currencies.
"Generally the data's been quite good in Canada, so I think that has allowed the Canadian dollar hold its own against what's been a very pro-US dollar trend over the past number of weeks," said Don Mikolich, executive director, foreign exchange sales.
"The US dollar index has been at a four-year high, and yet the Canadian dollar's been able to retrenched to the C$1.12s and now slightly into C$1.13s."
At 9:23 a.m. (1423 GMT), the Canadian dollar was trading at C$1.1319 to the US dollar, or 88.35 US cents, weaker than Friday's close of C$1.1277, or 88.68 US cents.
Mikolich said the currency was unlikely move much beyond C$1.1270 and C$1.1360 in the near term.
Investors and market participants will likely seek direction from a slew of US data due this week, as well as the US Federal Reserve minutes on Wednesday. In Canada, the next major economic news will be CPI data, due on Friday.
Canadian government bond prices were mostly higher across the maturity curve, but the two-year bond was flat, with a yield of 1.008 percent. The benchmark 10-year was up 11 Canadian cents to yield 2.021 percent.
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