The Canadian dollar gained ground against its US counterpart on Monday as optimism that Greece and its creditors were on their way to a breakthrough debt deal kept it strong even after oil prices turned lower and the greenback reversed early losses. Prices for oil, a key Canadian export, lost ground after their early gains had strengthened the loonie.
Sentiment in global markets, which had been jittery about the uncertainty surrounding a potential debt default by Greece, was optimistic that a last-minute deal could be reached. At 9:30 am EDT (1330 GMT), the Canadian dollar was at C$1.2250 to the greenback, or 81.63 US cents, firmer than the Bank of Canada's official close of C$1.2266, or 81.53 US cents, on Friday.
The currency's strongest level of the session was C$1.2218, while its weakest level was C$1.2277. No notable Canadian economic data is expected this week. US crude prices were down 0.87 percent at $59.09 a barrel after touching $60.30 earlier, while Brent crude lost 0.68 percent to $62.59, after hitting $63.74.
The Canadian dollar is expected to trade between C$1.2190 and C$1.2270 against the US dollar during the North American session on Monday, according to RBC Capital Markets. Canadian government bond prices were mixed across the maturity curve, with longer-term bonds falling. The two-year price was down 5 Canadian cents to yield 0.618 percent and the benchmark 10-year fell 45 Canadian cents to yield 1.763 percent. The Canada-US two-year bond spread was -3.50 basis points, while the 10-year spread was -56.6 basis points.