The Canadian dollar CADUSD gained ground against its U.S. counterpart on Monday, but by a lesser degree than some other G10 currencies as oil prices fell and investors awaited a Bank of Canada interest rate decision.
The loonie was trading 0.3% higher at 1.3680 to the greenback, or 73.10 U.S. cents, after moving in a range of 1.3668 to 1.3736.
“The U.S. dollar is weaker against everything. In a soft U.S. dollar environment Canada typically lags on the crosses,” said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. “It’s not just that pattern but also a little hesitancy ahead of Wednesday’s central bank meeting.”
The Canadian central bank will leave interest rates on hold at a 22-year high of 5% on Wednesday as the economy stalls, analysts said, though many see the bank warning that future hikes are still possible with inflation hovering well above its 2% target.
The U.S. dollar fell against a basket of currencies as U.S. Treasury yields retreated after the 10-year rate briefly breached the 5% level for the first time since 2007.
Speculators have raised their bearish bets on the Canadian dollar to the most in five months, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Oct. 17, net short positions had increased to 48,539 contracts from 46,489 in the prior week.
The price of oil, one of Canada’s major exports, fell as diplomatic efforts in the Middle East intensified in an attempt to contain the conflict between Israel and Hamas, easing investor concerns about potential supply disruptions.
U.S. crude oil futures were down 2.5% at $85.85 a barrel, while Canadian bond yields eased across the curve, tracking moves in U.S. Treasuries. The 10-year was down 5.4 basis points at 4.019%.