TORONTO (Reuters) - The Canadian dollar weakened on Monday against its U.S. counterpart as lower oil prices offset strong domestic wholesale trade data, while investors weighed the G20’s decision to drop a pledge to resist trade protectionism.
Financial leaders of the world’s biggest economies dropped a pledge to keep global trade free and open, acquiescing to an increasingly protectionist United States.
About 75 percent of Canadian exports go to the United States. Its economy could be hurt by renegotiation of the North American Free Trade Agreement (NAFTA) or the implementation of a proposed U.S. border adjustment tax.
Prices of oil, one of Canada’s major exports, fell on concerns that growing U.S. crude output could hamper an Organization of the Petroleum Exporting Countries-led production cut deal.
U.S. crude CLc1 prices were down 1.44 percent at $48.08 a barrel.
Canadian wholesale trade unexpectedly soared by 3.3 percent in January on stronger sales of motor vehicles and parts, Statistics Canada data showed. In volume terms, wholesale trade grew by 3.4 percent, which is likely to bolster overall economic growth for the month.
At 9:21 a.m. ET (1321 GMT), the Canadian dollar CAD=D4 was trading at C$1.3349 to the greenback, or 74.91 U.S. cents, slightly weaker than Friday’s close of C$1.3337, or 74.98 U.S. cents.
The currency traded in a range of C$1.3304 to C$1.3371.
The loonie rose 0.9 percent last week, helped by stronger-than-expected domestic manufacturing data and the prospect of Federal Reserve interest rate hikes proceeding at only a gradual pace.
Speculators cut bullish bets on the Canadian dollar for the second straight week, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian dollar net long positions fell to 21,458 contracts as of March 14 from 29,220 a week earlier.
Canadian government bond prices were mixed across the yield curve, with the two-year CA2YT=RR up 0.5 Canadian cent to yield 0.803 percent and the 10-year CA10YT=RR falling 4 Canadian cents to yield 1.765 percent.
The 10-year yield touched its lowest intraday since March 8 at 1.751 percent.
Domestic retail sales data for January is due on Tuesday and the Canadian government will release its federal budget on Wednesday. ECONCA
Canada’s finance minister will give an update on the deficit when he presents the federal budget, hoping to flesh out plans to spend the way to growth without drawing the wrath of debt rating agencies and businesses struggling to compete.
Reporting by Fergal Smith; Editing by Meredith Mazzilli