The Canadian dollar edged lower against its U.S. counterpart on Monday as American trade policy uncertainty weighed on investor sentiment, but the currency’s move was limited ahead of domestic GDP data later this week.
The loonie was trading 0.1% lower at 1.3690 per U.S. dollar, or 73.05 U.S. cents, after moving in a range of 1.3649 to 1.3700.
Wall Street’s main indexes dropped as uncertainty around tariffs intensified. U.S. President Donald Trump warned countries against backing away from recently negotiated trade deals with the U.S. after the Supreme Court struck down his emergency tariffs.
“The FX reaction to the tariff news has been fairly muted, though the uncertainty factor is very high,” said Amo Sahota, director at Klarity FX in San Francisco. “USD-CAD is essentially trapped and looking for a clean signal to break out in either direction of a one cent range since early last week.”
Economists expect a flat reading for fourth quarter GDP, due on Friday. That would match the Bank of Canada’s projection in January when it left the benchmark interest rate on hold at 2.25%.
“A soft reading is unlikely to move the interest rate outlook given the current accommodative stance,” Sahota said.
Speculators have raised their bullish bets on the Canadian dollar to the highest since August 2022, data from the U.S. Commodity Futures Trading Commission showed on Friday. Non-commercial net long positions stood at 25,826 contracts as of February 13, up from 13,276 in the prior week.
The price of oil, one of Canada’s major exports, dipped 0.3% to $66.29 a barrel as the U.S. and Iran prepared for a third round of nuclear talks.
Canadian bond yields moved lower across a flatter curve, tracking moves in U.S. Treasuries. The 10-year was down 3.7 basis points at 3.181%, after touching its lowest level since December 1 at 3.176%.