TORONTO: The Canadian dollar lost further ground against its US counterpart on Monday as a sell-off in stocks and a drop in oil prices weighed on the risk-sensitive commodity currency, while Canada's 10-year yield hit a new record low.
Investors shed risky assets as worries persisted over the pace of global growth.
US crude prices were down 1.52 percent at $30.42 a barrel after a Saudi-Venezuela meeting showed few signs that steps would be taken to boost prices.
On Friday, weak Canadian jobs data underlined the economy's struggles to cope with an oil shock, while US wage growth helped stabilize the greenback.
Attention has shifted to US Federal Reserve Chair Janet Yellen's testimony on Wednesday amid doubts about the Fed's ability to raise rates this year.
At 9:20 a.m. EST (1420 GMT), the Canadian dollar was trading at C$1.3949 to the greenback, or 71.69 US cents, weaker than Friday's official close of C$1.3908, or 71.90 US cents.
The currency's strongest level of the session was C$1.3841, while it hit its weakest since Feb. 3 at C$1.3978.
The value of Canadian building permits surged 11.3 percent in December, topping economists' forecasts for a gain of 5.6 percent.
Speculators have trimmed bearish bets against the Canadian dollar, a week after they hit their highest in five months.
Net short Canadian dollar positions decreased to 52,420 contracts in the week ended Feb. 2 from 66,819 in the prior week, Commodity Futures Trading Commision data showed on Friday.
Canadian government bond prices were higher across the maturity curve amid a flight to safety, while the curve flattened as the long-end outperformed.
The two-year price rose 3 Canadian cents to yield 0.355 percent and the benchmark 10-year was up 55 Canadian cents to yield 1.072 percent. The 10-year yield hit a new record low at 1.056 percent.
The Canada-US two-year bond spread was 1.9 basis points less negative at -33.6 basis points as Treasuries outperformed at the front of the curve.
A speech by Bank of Canada Deputy Governor Timothy Lane on monetary policy and financial stability will be published at 11:50 a.m. EST (1650 GMT).
Remarks will likely reflect the Bank of Canada's view that macro prudential policies are the best way to address financial vulnerability, according to a research note on Monday from RBC Capital Markets.
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