The Canadian dollar edged lower against its U.S. counterpart on Monday as oil prices fell and the greenback broadly climbed, but the loonie kept hold of most of its 2019 gains after having performed better than its peers since the start of the year.
The price of oil, one of Canada’s major exports, fell after disappointing U.S. factory data sparked fresh concerns about a slowdown in the global economy.
U.S. crude oil futures settled 1.3 per cent lower on Monday at $54.56 a barrel. Still, oil has rallied about 29 per cent since hitting its lowest point in 18 months in December.
“I think oil is going to stay firm and the Canadian dollar should stay firm with it,” said Ronald Simpson, managing director, global currency analysis at Action Economics.
The U.S. dollar strengthened across the board as investors took heart from Friday’s strong U.S. payrolls number and improved risk appetite helped lift the greenback to a five-week high against the safe-haven yen.
At 3:57 p.m. (2057 GMT), the Canadian dollar was trading 0.1 per cent lower at 1.3115 to the greenback, or 76.25 U.S. cents. The currency, which on Friday touched its strongest intraday level in nearly three months at 1.3069, traded in a range of 1.3086 to 1.3147.
The loonie has climbed 4 per cent since the start of the year, making it the top-performing G10 currency. It fell 7.8 per cent in 2018.
Data last Friday from the U.S. Commodity Futures Trading Commission, which had been delayed during a partial shutdown of the U.S. government, and Reuters calculations showed that speculators raised their bearish bets on the Canadian dollar in December to the highest in about five months.
As of Dec. 24, net short positions had jumped to 44,692 contracts from 7,457 a week earlier.
Canadian government bond prices were little changed across much of the yield curve, with the 10-year flat to yield 1.959 per cent.
The gap between Canada’s 10-year yield and its U.S. equivalent widened by 3.4 basis points to a spread of 76.6 basis points in favour of the U.S. bond.
Canada’s employment report for January is due on Friday, which could help guide expectations for additional interest rate hikes from the Bank of Canada.