C$ dips as US-China trade talks concerns weigh on oil

TORONTO: The Canadian dollar weakened against its broadly stronger US counterpart on Monday as oil prices fell and investors weighed prospects for trade talks this week between the United States and China.

The US dollar rose as concerns grew that US-China talks would not heal a rift over trade between the world's largest economies.

Canada is a major producer of commodities, including oil, so its economy could be hurt by an uncertain outlook for global trade.

The price of oil fell as an uptick in US drilling, a shutdown caused by a fire at a major US refinery and concerns about US-China trade talks all overshadowed support from OPEC-led supply restraint.

US crude prices were down 2.3 percent at $51.5 a barrel.

At 10:45 a.m. EST (1545 GMT), the Canadian dollar was trading 0.2 percent lower at 1.3306 to the greenback, or 75.15 US cents. The currency traded in a range of 1.3261 to 1.3314.

On Friday, much stronger-than-expected domestic jobs data helped the loonie rebound from its weakest intraday in two weeks at 1.3329. But the currency still lost ground last week, declining 1.4 percent.

Data last Friday from the US Commodity Futures Trading Commission and Reuters calculations showed that speculators last month raised their bearish bets on the Canadian dollar to the highest since June 2017.

As of Jan. 8, net short positions had jumped to 66,002 contracts from 50,649 at the end of December.

Canadian government bond prices were lower across the yield curve in sympathy with US Treasuries. The two-year fell 5.5 Canadian cents to yield 1.8 percent and the 10-year declined 30 Canadian cents to yield 1.916 percent.

The gap between Canada's 10-year yield and its US equivalent narrowed by 1.4 basis points to a spread of 73.7 basis points in favor of the US bond.