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TORONTO (Reuters) - The Canadian dollar fell versus the U.S. dollar on Monday due to concern about how lofty energy prices could crimp global economic growth, but the currency's move was limited by an absence of trade because of the U.S. Memorial Day holiday.
Canadian bond prices were pinned lower across the curve all session as dealers awaited key U.S. and Canadian economic data due out later this week.
The Canadian dollar closed at US$1.0081, valuing a U.S. dollar at 99.20 Canadian cents, down from US$1.0119, valuing a U.S. dollar at 98.82 Canadian cents, at Friday's close.
Prices for many of the commodities that Canada produces are sitting at high levels but they are not having as positive an impact on the currency as they once had.
The domestic currency shot 17.5 percent higher last year versus the U.S. dollar due in large part to gains in the price of oil. But crude oil has soared almost 40 percent this year and the Canadian dollar is only up about 0.5 percent.
"I suspect the key issue still is energy prices -- oil and natural gas -- but to what extent those higher prices may be having an impact on the economic outlook for the world and more specifically for the United States," said Carlos Leitao, chief economist at Laurentian Bank of Canada in Montreal.
"But all in all it's been a fairly quiet trading day."
The Canadian currency, coming off a third straight winning week against the U.S. dollar, dropped to its lowest level in nearly a week shortly after midday, when it touched US$1.0065, valuing a U.S. dollar at 99.35 Canadian cents.
The only key piece of Canadian data this week is Friday's quarterly gross domestic product report.
The Canadian dollar rose above the U.S. dollar two weeks ago then rallied last week to US$1.0184, valuing a U.S. dollar at 98.19 Canadian cents. It has since been weighed down by investors who opted to pocket some of their recent gains.
Canadian bond prices all ended lower in a lackluster session in which the few dealers in attendance opted to wait for key economic figures later this week before making any major moves.
"The market seemed to be a little undecided but I think we'll start to see more decision later this week," said Leitao, referring to the U.S. new home sales data for April due out on Tuesday and Friday's Canadian GDP report.
The two-year bond ended down 6 Canadian cents at C$101.43 to yield 3.014 percent. The 10-year bond dropped 16 Canadian cents to C$102.66 to yield 3.650 percent.
The yield spread between the two- and 10-year bond was 63.6 basis points, down from 63.9 at the previous close.
The 30-year bond shed 15 Canadian cents to C$115.45 for a yield of 4.086 percent.
The three-month when-issued T-bill yielded 2.67 percent, unchanged from the previous close.