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TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday, paring some of Friday's large gains, as weaker-than-expected Chinese trade data reinvigorated a recent selloff in metals, offsetting higher oil prices.
The currency, one of the worst performers against the greenback so far this year, has weakened steadily since mid-April and hit a 14-month low before Friday's jump.
On Monday, the yield on Canadian two-year bonds fell the farthest below their U.S. equivalent since 2007, to a spread of -62.5 basis points, as investors almost completely gave up on bets the Bank of Canada could raise rates this year.
The currency's recent losses have also been caused by a mix of lower commodity prices, concerns about a possible NAFTA renegotiation, and U.S. investor wariness about how the troubles of alternative lender Home Capital could impact the country's real estate market, said Don Mikolich, executive director for foreign exchange sales at CIBC Capital Markets.
"I think we've just run out of steam at this stage," he said. "We've come so far so quickly."
U.S. Commerce Secretary Wilbur Ross said on Saturday that threats of retaliatory trade actions from Canadian officials were "inappropriate" and would not influence final U.S. import duty determinations on Canadian softwood lumber.
At 4 p.m. EDT (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.3699 to the greenback, or 72.99 U.S. cents, up 0.4 percent, according to Reuters data.
The currency traded in a range of C$1.3644 to C$1.3733.
The loonie had rebounded on Friday from a 14-month low as U.S. oil prices bounced back from levels not seen in five months. Canada is a major producer of commodities, including oil and metals.
Oil got a boost on Monday from statements from major oil-producing countries suggesting that OPEC and non-OPEC supply cuts could be extended into 2018.
Copper prices slid to a four-month low after data showed a sharp drop in imports into China, the world's biggest consumer, feeding pessimism about demand following hefty inflows into London Metal Exchange inventories last week.
Speculators have ramped up bearish bets on the Canadian dollar to the most since February 2016, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday.
Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR price down half a Canadian cents to yield 0.709 percent and the 10-year CA10YT=RR falling 42 Canadian cents to yield 1.590 percent.
Additional reporting by Fergal Smith; Editing by Meredith Mazzilli and Tom Brown