TORONTO: The Canadian dollar weakened to a three-week low against its US counterpart on Monday, tracking losses for other commodity currencies after China's trade data disappointed and oil prices turned lower.
The loonie has fallen 4 percent from a 10-month high last week of C$1.2461 after weaker-than-expected domestic trade data and wildfire-driven oil production cuts in Alberta's oil sands region hurt Canada's economic outlook.
Economists say second-quarter growth may slow to a standstill, leaving the central bank on hold.
Speculators have increased bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions rose to 18,943 contracts in the week ended May 3 from 11,999 contracts the prior week.
However, some strategists have turned bearish on the loonie after technical support for the currency weakened last week.
"The time is ripe for the loonie to weaken after three months of sustained strength," said Bipan Rai, executive director, macro strategy at CIBC Capital Markets in a research note.
At 9:21 a.m. EDT (1321 GMT), the Canadian dollar was trading at C$1.2979 to the greenback, or 77.05 US cents, weaker than Friday's close of C$1.2919, or 77.41 US cents.
The currency's strongest level of the session was C$1.2906, while it touched its weakest since April 18 of C$1.2983.
China's exports and imports fell more than expected in April, underlining weak demand at home and abroad and cooling hopes of a recovery in the world's second-largest economy.
China is a major customer for Canada's commodity exports.
US crude prices were down 1.28 percent to $44.09 a barrel.
Canadian seasonally adjusted housing starts were 191,512 in April, compared with a revised 202,375 units in March.
Canadian government bond prices rose across the maturity curve, with the two-year price up 0.5 Canadian cent to yield 0.559 percent and the benchmark 10-year rising 8 Canadian cents to yield 1.345 percent.
The curve flattened, as the spread between the 2-year and 10-year yields narrowed by 0.7 of a basis point to touch its narrowest since April 20 of 78.6 basis points, indicating outperformance for longer-dated maturities.
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