The Canadian dollar was little changed against its U.S. counterpart on Monday, holding near Friday’s eight-day low as oil prices fell and investors awaited a Federal Reserve policy meeting later in the week.
At 3:44 p.m., the Canadian dollar was trading nearly unchanged at 1.3413 to the greenback, or 74.55 U.S. cents.
The currency, which on Friday touched its weakest level in more than a week at 1.3424, traded in a narrow range of 1.3394 to 1.3420.
“The natural home is going to be the 1.33 to 1.35 range for the coming weeks,” said Christian Lawrence, senior market strategist at Rabobank. “So much of it is going to be dependent on the Fed on Wednesday.”
The U.S. Federal Reserve, facing fresh demands by President Donald Trump to cut interest rates, is expected to leave borrowing costs unchanged at an interest rate decision on Wednesday but possibly lay the groundwork for a rate cut later this year.
In contrast, the Bank of Canada has signalled in recent weeks that it would remain on the sidelines as it monitors economic developments.
“Canadian data is holding up well enough for the Bank of Canada to not adopt a dovish bias, but the underlying trend is much weaker,” Lawrence said.
Flexible exchange rates are a key reason for the Canadian central bank’s success in targeting inflation and will remain an important part of the monetary policy framework, Bank of Canada Deputy Governor Lawrence Schembri said.
Canada’s inflation report for May is due on Wednesday.
The price of oil, one of Canada’s major exports, fell after weaker Chinese economic figures fanned fears of lower worldwide oil demand. U.S. crude oil futures settled 1.1 per cent lower at $51.93 a barrel.
Canada looks set this week to approve a hotly debated plan to expand an oil pipeline, people familiar with the process told Reuters, but the move is unlikely to help Prime Minister Justin Trudeau rebuild flagging support ahead of an October election.
Foreign investors sold a net $12.80 billion in Canadian securities in April, led by equities, following a revised $1.56 billion total divestment in March, Statistics Canada said.
Canadian government bond prices were lower across much of a flatter yield curve, with the two-year down 3 cents to yield 1.398 per cent and the benchmark 10-year falling 8 cents to yield 1.444 per cent.
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