TORONTO (Reuters) - The Canadian dollar pared some losses against the U.S. dollar on Monday, rebounding from an earlier 11-day low as oil rose and bets on a Federal Reserve interest rate hike were scaled back.
Growing concerns that global central banks’ commitment to monetary policy stimulus may be waning have weighed on risk-sensitive assets and currencies, such as the Canadian dollar, over the past few days. But U.S stock prices rebounded on Monday after Fed policymakers expressed caution about the need to raise U.S. interest rates.
Those “dovish sounding comments” helped support the Canadian dollar, said Robert Kavcic, senior economist at BMO Capital Markets.
The probability of a Fed rate hike in September fell to 15 percent from 24 percent on Friday, according to CME Group’s FedWatch tool.
U.S. crude oil futures CLc1 settled up 41 cents at $46.29 a barrel, helped by a softer U.S. dollar and stronger U.S. equity markets. [O/R]
Oil is one of Canada’s major exports.
Canada is working towards signing a new trade agreement with the European Union in October, Canadian Trade Minister Chrystia Freeland told the Toronto Global Forum.
The Canadian dollar CAD=D4 ended at C$1.3049 to the greenback, or 76.63 U.S. cents, slightly weaker than Friday’s close of C$1.3037, or 76.70 U.S. cents.
The currency’s strongest level of the session was C$1.3035, while it touched its weakest since Sept. 1 at C$1.3123.
The loonie’s modest losses followed a more dovish-than-expected statement from the Bank of Canada last week.
Data on Friday showed Canada created more jobs than expected in August on increased hiring in the construction and services sectors, but the gains did not fully make up for recent declines in employment.
Speculators have pared bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed on Friday.
Canadian government bond prices were mixed across the maturity curve, with the two-year CA2YT=RR bond down 0.5 Canadian cent to yield 0.586 percent and the benchmark 10-year CA10YT=RR flat to yield 1.151 percent.
Earlier in the session, the 10-year yield touched its highest since June 21 at 1.204 percent.
Domestic manufacturing sales data for July is due for release on Friday. Strong sales at the start of the third quarter would likely reinforce expectations that the economy will bounce back strongly after shrinking in the second quarter. ECONCA
Reporting by Fergal Smith; Editing by Nick Zieminski and Grant McCool