(Reuters) - The Canadian dollar weakened modestly against the greenback on Monday, consolidating gains from last week’s rally and as oil prices slipped on expectations that U.S. output will rise this year.
At 4:05 p.m. EDT (2005 GMT), the Canadian dollar CAD=D4 was trading 0.2 percent lower at C$1.2836 to the greenback, or 77.91 U.S. cents.
The loonie pulled back from a more than one-week high hit on Friday amid improved risk appetite and after U.S. President Donald Trump said Canada and Mexico would be exempt from tariffs on steel and aluminum as long as talks to update the North American Free Trade Agreement progressed.
Lower oil prices also helped pressure the Canadian dollar as U.S. crude CLc1 settled down 68 cents at $61.36 a barrel. [O/R]
“The main takeaway of markets today is a bit of consolidation,” said Scott Smith, managing partner at Viewpoint Investment Partners.
Canadian markets were also looking ahead to Tuesday’s speech on the labor market by Bank of Canada Governor Stephen Poloz, likely the main domestic economic event of the week.
The central bank held interest rates steady last week as expected, while a speech from Deputy Governor Tim Lane on Thursday stuck to the bank’s dovish message that it would be cautious in considering further increases.
While Poloz is unlikely to deviate from that message, Bank of Canada speeches always carry some risk, Smith said.
“The Bank of Canada can be fairly volatile in their speeches and how they communicate monetary policy, so we can’t just expect that we won’t see any changes out of Poloz,” Smith said.
Finance Minister Bill Morneau said during a visit to London on Monday that there were parallels between the way companies in North America and Britain are holding back on investment as they respectively wait for clarity on the renegotiation of NAFTA and the outcome of talks on a Brexit deal.
Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR up 0.5 Canadian cent to yield 1.829 percent and the benchmark 10-year CA10YT=RR rising 25 Canadian cents to yield 2.239 percent.
Reporting by Leah Schnurr in Ottawa; Editing by Steve Orlofsky and Peter Cooney
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