The Canadian dollar turned weaker against its U.S. counterpart on Monday, as U.S. oil prices pulled back from a two-year high amid uncertainty about Russia’s resolve to extend output cuts at a meeting of producing countries this week.
At 4 p.m. (2100 GMT), the Canadian dollar was trading at C$1.2764 to the greenback, or 78.86 U.S. cents, down 0.45 percent at close to its weakest point of the session. It gained 0.4 percent last week.
David Bradley, director of foreign exchange trading at Scotiabank, said the currency pair caught the attention of corporate strategists as the greenback pushed above C$1.2750, but that trade was otherwise quiet.
The Canadian dollar was weaker against all of the major global currencies, most noticeably the Japanese yen. The loonie’s next major catalyst could come at the end of this week, with both a domestic jobs report for November and gross domestic product data for the quarter that ended in September due on Friday.
“You’re going to see all the algorithms kicking off those headlines and you could see some pretty erratic moves if one’s strong and one’s weak,” Bradley said. The currency’s weakest level for the session was C$1.2769, its weakest since last Wednesday, while it traded as strong as C$1.2681 early in the session.
The Bank of Canada is due to release its semi-annual Financial System Review on Tuesday, while currency strategists are also eyeing Friday’s data for clues on future Bank of Canada monetary policy after weak retail sales numbers last week. U.S. crude prices were down 1.8 percent to $57.92 a barrel, while Brent crude lost 0.1 percent to $63.78.
A report from Bank of Montreal said that Canadian GDP could decline 1 percent over five years if the North American Free Trade Agreement is terminated and would make all three member economies less competitive versus Europe and Asia.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 2 Canadian cents to yield 1.430 percent and the benchmark 10-year rising 18 Canadian cents to yield 1.867 percent.
The Canada-U.S. two-year bond spread widened slightly to -31.5 basis points, while the 10-year spread widened 1.3 basis points to -46.4 basis points.