TORONTO: The Canadian dollar weakened against its US counterpart on Monday as the greenback broadly rose, but the currency stuck to its recent holding pattern as oil prices climbed and investors weighed talks to update the NAFTA trade deal.
At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading 0.4 percent lower at C$1.2892 to the greenback, or 77.57 US cents. It traded in a range of C$1.2840 to C$1.2900.
The loonie on Friday hit a one-month low at C$1.2918 but it has mostly been confined to a narrow range over the past two weeks.
“We are just waiting for a break,” said Eric Theoret, currency strategist at Scotiabank. “We do see the Canadian dollar headed higher after this consolidation.”
Senior Canadian, US and Mexican officials trying to rescue slow-moving talks to update the North American Free Trade Agreement met on Monday in a new bid to resolve key issues before regional elections complicate the process.
“As we get closer to a resolution we could see CAD strengthen on the back of that,” Theoret said.
Canada sends about 75 percent of its exports to the United States.
The loonie lost ground even as the price of oil, one of Canada’s major exports, rose to its highest since late 2014, boosted by the latest troubles for Venezuelan oil company PDVSA and a looming decision on whether the United States will re-impose sanctions on Iran.
US crude oil futures settled 1.5 percent higher at $70.73 a barrel.
The US dollar hit a 2018 peak against a basket of currencies as investors increased bets that rising interest rates and inflation in the United States would boost the greenback.
The world’s growing economies will have to find ways to cope with an end to central bank stimulus, said Bank of Canada Deputy Governor Timothy Lane.
Canadian government bond prices were mixed across a flatter yield curve, with the two years down 1 Canadian cent to yield 1.916 percent and the 10-year rising 5 Canadian cents to yield 2.323 percent.
Canada’s jobs report for April is due on Friday.
Source: Brecorder
