TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday as investors assessed bets on commodity-linked currencies and weighed gloomy remarks by Canada’s chief negotiator at talks to modernize NAFTA.
At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent lower at C$1.2595 to the greenback, or 79.40 U.S. cents. The currency traded in a range of $1.2567 to C$1.2625.
The loonie, which has fallen 2.6 percent since the sell-off on Wall Street began earlier this month, lagged the performance of some other major currencies, including the euro and the yen. Fellow commodity-linked currency, the Australian dollar, also underperformed.
“A lot of it has to do with position squaring and how sensitive these (commodity-linked) currencies are to global risk markets.” said Bipan Rai, Executive Director and Senior Macro Strategist at CIBC Capital Markets.
On Friday, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed that speculators raised bullish bets on the Canadian dollar for the fifth straight week.
Investors that have made bullish bets on a currency could be vulnerable to losses if other investors that are long choose to cut or exit their positions.
Talks to revamp the $1.2 trillion North American Free Trade Agreement had achieved little progress on major issues so far, Canada’s chief negotiator Steve Verheul said.
Canada sends about 75 percent of its exports to the United States.
The price of oil, one of Canada’s major exports, dipped after the International Energy Agency forecast supply could outstrip demand. U.S. crude oil futures CLc1 settled 0.2 percent lower at $59.19 a barrel.
Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 0.5 Canadian cent to yield 1.781 percent and the 10-year CA10YT=RR rising 14 Canadian cents to yield 2.32 percent.
The Canadian Real Estate Association will release its monthly home sales report on Thursday. Canada’s manufacturing sales report for December is due on Friday.
Reporting by Fergal Smith; editing by Grant McCool