TORONTO: The Canadian dollar weakened against its US counterpart on Monday as oil dipped and expectations for further US Federal Reserve interest rate hikes kept the greenback close to its highest in 14 years.
The loonie fell 1.2 percent last week after the Fed raised interest rates and signaled increases would follow at a faster pace next year.
The price of oil, one of Canada's major exports, edged down due to renewed gains for the US dollar, but losses were tempered by delays in new Libyan oil exports and expectations of tighter supplies going into 2017.
The US dollar was underpinned by expectations that a fiscal expansion planned by US President-elect Donald Trump will boost inflation and lead to a faster pace of interest rates hikes.
At 9:25 a.m. EST (1425 GMT), the Canadian dollar traded at C$1.3382 to the greenback, or 74.73 US cents, weaker than Friday's close of C$1.3344, or 74.94 US
The currency's strongest level of the session was C$1.3319, while its weakest was C$1.3395.
On Thursday, the loonie hit its weakest in two weeks at C$1.3417.
Bank of Canada Governor Stephen Poloz said rising global protectionism could drive up the cost of goods and cause job losses, but dismissed the conclusion that Canadian exports will suffer under a Trump administration.
Speculators raised bearish bets on the Canadian dollar to the most since March, according to Reuters calculations and data from the Commodity Futures Trading Commission released on Friday. Net short Canadian dollar positions rose to 21,869 contracts as of Dec. 13 from 18,158 a week earlier.
Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries. The two-year rose 3 Canadian cents to yield 0.806 percent and the benchmark 10-year climbed 21 Canadian cents to yield 1.808 percent.
The 10-year yield on Thursday touched ts highest since June 2015 at 1.859 percent.
Canada's wholesale trade report for October is due on Tuesday, with economists forecasting that sales will pick up 0.6 percent after unexpectedly slumping the previous month.
Domestic reports on inflation for November and retail sales and gross domestic product for October are due later in the week.
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