The Canadian dollar weakened against its US counterpart on Monday as the greenback broadly rose and talks to update the NAFTA trade deal entered a make-or-break week. Ministers from Canada, the United States and Mexico meet in Washington on Monday to discuss the North American Free Trade Agreement, and will seek to resolve an impasse in key areas before elections in Mexico and the United States complicate the process.
The US dollar climbed back towards its highest level in 2018 as investors continued to bet that rising interest rates in the United States would boost the greenback. At 9:19 am EDT (1319 GMT), the Canadian dollar was trading 0.2 percent lower at C$1.2868 to the greenback, or 77.71 US cents. The currency traded in a range of C$1.2840 to C$1.2890. It hit a one-month low on Friday at C$1.2918.
The loonie lost ground on Monday even as the price of oil, one of Canada's major exports, rose to its highest since late 2014, boosted by fresh troubles for Venezuelan oil company PDVSA and a looming decision on whether the United States will re-impose sanctions on Iran.US crude prices were up 1.2 percent at $70.54 a barrel.
The world's growing economies will have to find ways to cope with an end of central bank stimulus, said Bank of Canada Deputy Governor Timothy Lane. Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 0.5 Canadian cent to yield 1.913 percent and the 10-year rising 7 Canadian cents to yield 2.320 percent. Canada's jobs report for April is due on Friday.