Canadian dollar steadies ahead of trade news as investors bet on volatility

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday as investors sat tight ahead of potential news on trade after buying option structures in recent days that could profit from increased volatility in the currency.

FILE PHOTO: A Canadian dollar coin, commonly called a "Loonie" and an American dollar bill are seen in this staged photo in Toronto, March 17, 2010. REUTERS/Mark Blinch/File Photo

U.S. President Donald Trump said he would announce his latest plan on China tariffs after the markets close, with expectations he would level them on about $200 billion of Chinese imports.

Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.

The country has its own trade feud with the United States and is also in talks to revamp the North American Free Trade Agreement.

“There are quite a few names that are sitting on long butterfly positions, so they’ll make money if it (the Canadian dollar) moves up or down,” said Simon Côté, managing director, risk management solutions, National Bank Financial. “We just need a decent move either way before they take profit or restructure what they have.”

At 3:27 p.m. (1927 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3029 to the greenback, or 76.75 U.S. cents. The currency, which rose nearly 1 percent last week, traded in a range of 1.3002 to 1.3048.

The price of oil, one of Canada's major exports, dipped as the market weighed deepening trade tension that is expected to dent global crude demand and potential supply tightening due to Iran sanctions. U.S. crude oil futures CLc1 settled 0.1 percent lower at $69.91 a barrel.

The U.S. dollar .DXY retreated as sterling and the euro were boosted by optimism that Britain would reach a deal with the European Union on the terms of its departure from the bloc.

Foreign investors bought a net C$12.65 billion in Canadian securities following a revised C$10.30 billion total purchase in June, while Canadian investment in foreign securities also climbed, data from Statistics Canada showed.

In separate data, resales of Canadian homes rose 0.9 percent in August from July, notching the fourth straight monthly rise but remaining below the highs seen in recent years, the Canadian Real Estate Association said.

Canadian government bond prices edged higher across the yield curve, with the 10-year CA10YT=RR rising 3 Canadian cents to yield 2.342 percent. Still, the 10-year yield held near its highest level in nearly six weeks.

Canada’s inflation report for August and July retail sales data are due on Friday.

Reporting by Fergal Smith; Editing by Paul Simao and Alistair Bell