November 26, 2018 / 9:09 PM / 8 months ago

Canadian dollar near flat as GM plant closure offsets oil price rally

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday, as a rebound in oil prices was offset by news that General Motors Co (GM.N) would close its plant in Oshawa, Ontario, east of Toronto.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

Hundreds of workers walked off the job and Canadian Prime Minister Justin Trudeau expressed “deep disappointment” after the auto manufacturer’s announcement caught governments and employees by surprise.

The closure of the plant reminded markets “that Canada does have a little bit of a competitiveness issue,” said Greg Anderson, global head of foreign exchange strategy in New York at BMO Capital Markets.

Last week, Canada’s government said it would allow businesses to write off additional capital investments to make them more competitive at a time when the United States is aggressively cutting taxes. []

Still, Ottawa did not announce measures that would help the country’s energy sector, which has been hit hard by depressed oil prices.

The price of oil clawed back on Monday some of the previous session’s steep losses. U.S. crude oil futures CLc1 settled 2.4 percent higher at $51.63 a barrel, while Wall Street rebounded as buyers returned in force after last week’s sell-off.

At 3:38 p.m. (2038 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3242 to the greenback, or 75.52 U.S. cents. The currency, which last Tuesday touched its weakest level in nearly five months at 1.3318, traded in a range of 1.3188 to 1.3248.

Speculators have added to their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Nov. 20, net short positions had increased to 6,289 contracts from 2,791 a week earlier.

Data on Friday showed that Canada’s annual inflation rate remained above the central bank’s target for the ninth straight month in October, but markets saw few signs the Bank of Canada would hike interest rates next month.

Canada’s gross domestic product data for the third quarter is due on Friday.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 2.5 Canadian cents to yield 2.245 percent and the 10-year CA10YT=RR declined 15 Canadian cents to yield 2.358 percent.

On Friday, the 10-year yield touched its lowest in more than two months at 2.330 percent.

Reporting by Fergal Smith; Editing by Grant McCool and Peter Cooney

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