TORONTO: The Canadian dollar softened marginally against the US dollar on Monday with the greenback gathering strength on positive data, but much of the market was sidelined ahead of the two-day US Federal Reserve policy meeting that starts Tuesday.
The US currency extended gains after figures showed growth in New York state's manufacturing sector picked up in June, and that sentiment among US homebuilders surged to the highest level in seven years.
"Really kind of a lackluster day ... It ebbed and flowed a bit with some US dollar movement," said Darcy Browne, managing director, capital markets trading, at CIBC. "The market's become a little bit more sensitive to US data."
The Canadian dollar, whose performance was mixed against other major currencies, finished at C$1.0177 versus the greenback, or 98.26 US cents. That was slightly weaker than its Friday close of C$1.0169, or 98.34 US cents.
Browne said the currency was range-bound between C$1.0140 and the C$1.02.
Global equity markets recouped some of last week's losses overnight, with investors hoping the Fed will offer a more cautious tone on reining in its stimulus measures when it concludes its meeting on Wednesday.
Charles St-Arnaud, an economist and currency strategist at Nomura Securities in New York, said the currency market is expected to relatively quiet until the Fed makes a statement on Wednesday.
The Bank of Canada's new head, Stephen Poloz, will give his first official speech on Wednesday, which is also likely to garner scrutiny as the market tries to decipher his policy stance.
Browne said it was still early days for Poloz, and does not expect him to overshadow the Fed.
Data on Monday showed that foreign investors had an increased appetite for Canadian securities in April, adding C$14.91 billion to their portfolios, compared with C$956 million in March.
Government bond prices were mixed, with the two-year bond flat, yielding 1.109 percent, and the benchmark 10-year bond down 24 Canadian cents to yield 2.148 percent.
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