C$ heads for monthly gain as current account swings to surplus

TORONTO: The Canadian dollar edged lower against its US counterpart on Monday, but was on track to notch its fourth straight monthly gain as oil prices rose and data showed Canada posting a current account surplus for the first time since 2008.

Canada's current account balance was a surplus of C$1.2 billion in the first quarter, from a revised C$5.3 billion deficit in the fourth quarter of 2020, on a higher trade in goods and services, Statistics Canada said.

The price of oil, one of Canada's major exports, was supported by the bright outlook for fuel demand growth in the next quarter, while investors looked ahead to the OPEC+ meeting this week to see how producers will respond. US crude rose 1.4% to $67.27 a barrel.

The Canadian dollar was trading 0.1% lower at 1.2077 to the greenback, or 82.80 US cents, having traded in a range of 1.2061 to 1.2090. Since the start of the month, the currency has advanced 1.8%, extending a string of monthly gains that started in February.

Still, speculators have cut their bullish bets on the Canadian dollar for the first time in six weeks, data from the US Commodity Futures Trading Commission showed on Friday.

With London and New York markets closed for a holiday on Monday, the US dollar was little changed against a basket of major currencies.

Canada's GDP data for the first quarter is due on Tuesday and the May jobs report is due on Friday, which could offer clues on the Bank of Canada's policy outlook.

The central bank is likely to cut its bond-buying program again this year, possibly as soon as July, analysts said.

Canadian government bond yields edged lower across the curve, with the 10-year down about half a basis point at 1.499%.