The Canadian dollar weakened against its U.S. counterpart on Monday as commodity prices fell, but the scale of the currency’s decline was measured as it traded near a key technical level and Canada’s border with the United States was partly reopened.
The Canadian dollar was trading 0.1% lower at 1.2565 to the greenback, or 79.59 U.S. cents, after trading in a range of 1.2531 to 1.2587.
“A fairly orderly market for the loonie considering the losses being seen on oil, iron and copper,” said Amo Sahota, director at Klarity FX in San Francisco.
The price of oil, one of Canada’s major exports, settled 2.6% lower at $66.48 a barrel, extending last week’s steep losses. Investors worried that new coronavirus-related restrictions in Asia, especially China, could slow a global recovery in fuel demand.
Reduced expectations for Chinese growth could see USD-CAD probe above its 200-day moving average or the 1.26 threshold, Sahota said.
The 200-day moving average is at 1.2574.
The U.S. Senate on Sunday took further steps toward passing a bipartisan infrastructure bill that includes the largest U.S. investment in roads and bridges in decades. Canada sends about 75% of its exports to the United States.
Long delays were reported at the Canadian-U.S. border as Ottawa finally opened the border to fully vaccinated American tourists for the first time in 16 months.
Investors were awaiting U.S. inflation data on Wednesday for further clues on the Federal Reserve policy outlook. A strong U.S. payrolls report last Friday was thought by some investors to take the Fed a step nearer to winding back its stimulus.
Canadian government bond yields were little changed across the curve, with the 10-year at 1.242%. Earlier in the day, it touched its highest since July 16 at 1.257%.
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