The Canadian dollar weakened to a one-week low against its U.S. counterpart on Monday as comments by a Federal Reserve official supported the greenback and oil prices fell, offsetting stronger-than expected domestic data.
Canadian wholesale trade increased by 0.7 percent in June from May, the third consecutive monthly gain, Statistics Canada said. Analysts surveyed by Reuters had forecast a 0.1 percent increase.
The U.S. dollar firmed against a basket of major currencies after an upbeat assessment of the U.S. economy’s strength from Fed Vice Chairman Stanley Fischer on Sunday. Fischer’s assessment was seen raising the prospect of Fed Chair Janet Yellen flagging up a rate rise at a meeting with the world’s central bankers on Friday.
Oil prices fell as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth consecutive week, and prospects emerged for increased exports from Iraq and Nigeria. U.S. crude prices were down 2.74 percent to $47.19 a barrel.
At 9:41 a.m. EDT, the Canadian dollar was trading at C$1.2920 to the greenback, or 77.40 U.S. cents, weaker than Friday’s official close of C$1.2858, or 77.77 U.S. cents.
The currency’s strongest level of the session was C$1.2874, while it touched its weakest since Aug. 15 at C$1.2936.
On Friday, the loonie snapped a nearly two-week winning streak as domestic retail sales data disappointed.
Speculators reduced bullish bets on the loonie for a third straight week, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions fell to 12,473 contracts in the week ended Aug. 16 from 15,366 contracts in the prior week.
Canadian government bond prices were higher across the maturity curve, in sympathy with U.S. Treasuries. The two-year price rose 2.5 Canadian cents to yield 0.56 percent and the benchmark 10-year climbed 35 Canadian cents to yield 1.041 percent.
The curve flattened as the spread between the 2-year and 10-year yields narrowed by 2.4 basis points to 48.1 basis points, indicating outperformance for longer-dated maturities.
On Thursday, the spread hit its narrowest since June 2008 at 46.8 basis points.