The Canadian dollar CADUSD weakened against its U.S. counterpart on Monday as the greenback broadly climbed and extreme volatility in oil prices weighed on Wall Street.
The loonie was 0.5% lower at 1.2790 to the greenback, or 78.19 U.S. cents, after trading between 1.2686 and 1.2801. Except for brief periods, the 1.28 area has marked the top of the range for USD-CAD since the start of the year.
“Equities and high-risk currencies like the Canadian dollar are lower across the board,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.
FX traders have decided to ignore the move higher in oil prices and focus on the decline in risk appetite,” Richardson said.
The price of oil, one of Canada’s major exports, spiked to its highest level since 2008 at $130.50 a barrel before paring gains, as the United States and European allies considered banning Russian oil imports. U.S. crude oil futures settled 3.2% higher at $119.40 a barrel.
The prospect of surging commodity prices hurting economic activity was a drag on investor sentiment. Equity markets globally tumbled, while the safe-haven U.S. dollar rose against a basket of major currencies.
Still, speculators have raised their bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Canadian international trade data for January is due on Tuesday and the February employment report is due on Friday, which could offer clues on the strength of the domestic economy.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.
The 10-year rose 4.1 basis points to 1.705%, rebounding from its lowest level since Jan. 5 at 1.643% earlier in the day.
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