The Canadian dollar CADUSD strengthened against its U.S. counterpart on Monday as investors reversed some of the safe-haven buying ahead of last weekend and focused on major central bank meetings this week.
The loonie was trading 0.3% higher at 1.3825 to the greenback, or 72.33 U.S. cents, after moving in a range of 1.3814 to 1.3877. On Friday, the currency touched its weakest in one year at 1.3880.
“We’re seeing a bit of a bounce today as Middle East escalation hedges come off again after the weekend,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
Oil settled 3.8% lower at $82.31 a barrel as fears eased that the Israel-Hamas war would disrupt supply from the region, while the U.S. dollar fell after benefiting on Friday from safe-haven flows and bets that the Federal Reserve will keep interest rates higher for longer.
The Fed is widely expected to keep interest rates unchanged at the end of its policy meeting on Wednesday.
Speculators have slightly raised their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Oct. 24, net short positions had increased to 48,639 contracts from 48,539 in the prior week.
Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers will speak with lawmakers on the House of Commons finance panel at 15:30 ET (1930 GMT).
Last Wednesday, the Canadian central bank held its benchmark interest rate at a 22-year high of 5.0%, saying the path to avoid a recession had narrowed.
Canadian government bond yields rose across the curve, tracking moves in U.S. Treasuries. The 10-year was up 3.8 basis points at 4.019%.