C$ hits near two-week low as stocks, oil fall

TORONTO: The Canadian dollar slipped to a nearly two-week low against its US counterpart on Monday as a selloff in equity markets continued and oil prices fell.

At 9:14 a.m. EST (1414 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.2458 to the greenback, or 80.27 US cents.

The currency's strongest level of the session was C$1.2398, while it touched its weakest level since Jan. 23 at C$1.2462.

US stocks opened lower as rising bond yields continued to fuel the selloff in equities.

Commodity-linked currencies, such as the Canadian dollar, tend to underperform when stocks fall, due to the signal that it sends on prospects for global economic growth.

The price of oil, one of Canada's major exports, fell as rising US output and a weaker physical market added to the pressure from a widespread decline across equities and commodities.

The US dollar  rose against a basket of major currencies after data on Friday showing a pickup in US wage growth suggested to some investors that the Federal Reserve might have to raise interest rates more quickly than previously thought.

Canada's trade data for December is due on Tuesday and the January employment report is due on Friday. The country is coming off its best year for job growth since 2002 and economists will look to see whether the job market remains strong enough to support further interest rate hikes.

The Bank of Canada hiked rates in January but said uncertainty surrounding the future of the North American Free Trade Agreement is clouding the economic outlook.

Canadian Prime Minister Justin Trudeau took a tough line on NAFTA on Friday, repeating that he could walk away if he was not happy with talks to modernize a pact the United States contends needs major changes.

Speculators raised bullish bets on the Canadian dollar for the fourth straight week, data from the US Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Tuesday, net long positions had risen to 33,465 contracts from 22,557 a week earlier.

Canadian government bond prices were mixed across the yield curve, with the two-year up 0.5 Canadian cent to yield 1.851 percent and the 10-year  falling 3 Canadian cents to yield 2.366 percent.

The 10-year yield touched its highest intraday level since May 2014 at 2.393 percent.