TORONTO (Reuters) - The Canadian dollar rose against the U.S. dollar on Monday as oil prices firmed, but remained in a tight range ahead of key domestic data due later in the week.
Domestic bond prices were a touch higher as nagging fears about a U.S. economic slowdown and Microsoft Corp’s (MSFT.O) decision to drop its bid for Yahoo Inc YHOO.O lured investors into more secure assets like government debt.
At 8:00 a.m. EST, the Canadian unit was at C$1.0164 to the U.S. dollar, or 98.39 U.S. cents, up from C$1.0193 to the U.S. dollar, or 98.11 U.S. cents, at Friday’s close.
Driving the commodity-linked currency’s early gain was a $1 rise in oil prices to more than $117 a barrel and high gold prices. Oil and gold are major Canadian exports and the currency is often influenced by their price movements.
With no data due in Canada, investors will focus on Bank of Canada Deputy Governor John Murray’s presentation to the Statistics Canada Socio-economic Conference.
The presentation isn’t expected to offer any clues on the bank’s interest rate outlook or any new economic projections.
“I don’t think the comments from Deputy Governor Murray would have a major impact on the currency market because he is more talking about the link of the Canadian dollar and the benign inflation environment in Canada,” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
“Data due at the end of the week are obviously important for Canada and until then we’ll very much take our cue from U.S. dollar moves, equity markets and commodity markets.”
Canadian data due this week include March building permits and the Ivey Purchasing Managers Index for April on Tuesday. April housing starts figures will be released on Thursday and the key April employment report on Friday.
Canadian bond prices held on to slim gains ahead of an expected lower opening on North American equity markets after Microsoft dropped its bid for Yahoo.
Microsoft’s decision clouded the outlook for mergers and acquisitions, weighed on shares of Yahoo and led investors into more secure assets.
The two-year bond was up 1 Canadian cent at C$101.94 to yield 2.779 percent. The 10-year bond rose 2 Canadian cents to C$103.00 to yield 3.608 percent.
The yield spread between the two- and 10-year bonds was 82.0 basis points, down from 82.6 at the previous close.
The 30-year bond was unchanged at C$115.25 to yield 4.097 percent. In the United States, the 30-year Treasury yielded 4.576 percent.
The three-month when-issued T-bill yielded 2.65 percent, unchanged from the previous close.
Editing by Bernadette Baum