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TORONTO (Reuters) - The Canadian dollar rebounded and closed higher against the U.S. dollar on Monday, recouping all its losses from the previous session as weak economic data out of the United States rattled the greenback.
Domestic bond prices finished higher across the curve and reclaimed some of the steep losses suffered last week as the U.S. data boosted investor appetite for more secure assets like government debt.
The Canadian dollar closed at C$1.0225 to the U.S. dollar, or 97.80 U.S. cents, up from C$1.0292 to the U.S. dollar, or 97.16 U.S. cents, at Friday's close.
Oil prices climbed to a record high near $140 a barrel but ultimately retreated to settle lower on the day and did not help boost the commodity-linked Canadian dollar.
Instead, the currency's rise was more a result of a weak greenback, which stumbled as U.S. data raised doubts the Federal Reserve would soon hike interest rates.
"Overall, I think the big story today was just a pullback in the U.S. dollar," said Doug Porter, deputy chief economist at BMO Capital Markets.
With no domestic data to influence direction, the Canadian dollar spent the North American session in a range of C$1.0197 to C$1.0286 to the U.S. dollar, or 98.07 to 97.22 U.S. cents.
Key events in Canada that will be watched closely by market participants are Thursday's May consumer price index data and Bank of Canada Governor Mark Carney's speech in Calgary.
Carney, who will be giving his first speech since the central bank went against market expectations and left its key interest rate steady, will give a speech on "Capitalizing on the Commodity Boom: The Role of Monetary Policy" on Thursday evening after markets close.
With no domestic data to influence direction, Canadian bond prices rose alongside the bigger U.S. Treasury market after data from the New York Federal Reserve showed manufacturing in the state was weaker than expected.
Another piece of data showed U.S. home builder sentiment sank to match the lowest level on record set in December.
The rise in bond prices came on the heels of steep losses last week after various U.S. Federal Reserve officials said the central bank's main focus was shifting to inflationary concerns rather than the faltering economy.
"(The data) was not a big enough move to drive bonds far in either direction but just generally helped to put a floor under bonds after a very sharp selloff last week," said Porter.
The two-year bond climbed 4 Canadian cents to C$100.72 to yield 3.368 percent. The 10-year bond gained 8 Canadian cents to C$100.88 to yield 3.882 percent.
The yield spread between the two-year and 10-year bond was 51.4 basis points, up from 51.3 at the previous close.
The 30-year bond rose 18 Canadian cents to C$113.25 for a yield of 4.204 percent. In the United States, the 30-year treasury yielded 4.786 percent.
The three-month when-issued T-bill yielded 2.79 percent, down from 2.81 percent at the previous close.