The Canadian dollar weakened against its U.S. counterpart on Monday, as oil prices fell and investors turned attention to economic data later in the week that could guide expectations for the Federal Reserve’s interest rate outlook.
The loonie was trading 0.3% lower at 1.2333 to the greenback, or 81.08 U.S. cents, after touching its weakest intraday level since last Tuesday at 1.2347.
Canadian GDP data for April is due on Wednesday and the U.S. employment report is due on Friday.
The U.S. data could “unveil important clues as to how much more aggressive the Fed might be in adjusting its stance,” said Michael Goshko, corporate risk manager at Western Union Business Solutions.
The Canadian dollar has pulled back from a six-year high near 1.2000 per U.S. dollar earlier this month, pressured by the Fed’s surprise move to project interest rate hikes starting in 2023 rather than 2024.
Speculators have cut their bullish bets on the Canadian dollar for a third week, data from the U.S. Commodity Futures Trading Commission showed on Friday.
The price of oil, one of Canada’s major exports, settled 1.5% lower at $72.01 a barrel as a spike in COVID-19 cases in Asia and Europe put a brake on the rally before this week’s OPEC+ meeting.
Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year eased 4.8 basis points to 1.411%. Earlier this month, it touched its lowest since March at 1.364%.
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