The Canadian dollar was little changed against its U.S. counterpart on Monday, holding on to last week’s gains as U.S. fiscal stimulus moved a step closer to being passed and ahead of an interest rate decision by the Bank of Canada on Wednesday.
The U.S. Senate on Saturday passed the stimulus package and President Joe Biden said he hoped for quick passage of the revised bill by the House of Representatives so he could sign it and send $1,400 direct payments to Americans.
Canada sends about 75 per cent of its exports to the United States including oil.
U.S. crude oil futures were down 1.2 per cent at $65.31 a barrel, giving back some recent gains as U.S. Treasury yields climbed. Higher yields boosted the appeal of the U.S. dollar, which rose to a 3-1/2-month high against a basket of major currencies.
The Canadian dollar was trading nearly unchanged at 1.2659 to the greenback, or 79.00 U.S. cents, having traded in a range of 1.2622 to 1.2699. Last week, it rose 0.7 per cent.
Speculators have raised their bullish bets on the Canadian dollar to the highest in four weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of March 2, net long positions had increased to 15,327 from 9,132 in the prior week.
Investors see rising chances that the Bank of Canada would hike interest rates next year as the economic outlook improves, but the central bank is likely to push back against those bets for now, pointing to still high unemployment, analysts say.
Canadian government bond yields were higher across much of a steeper curve in sympathy with U.S. Treasuries. The 10-year
touched its highest since January last year at 1.545 per cent before dipping to 1.521 per cent, up 1.9 basis points on the day.
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