By Fergal Smith
The Canadian dollar edged lower against its U.S. counterpart on Monday as data showed speculators raising their bearish bets on the currency to the highest level this year.
The loonie FX_IDC:USDCAD was trading 0.1% lower at 1.4210 per U.S. dollar, or 70.37 U.S. cents, after moving in a range of 1.4176 to 1.4217. Last Wednesday, the currency touched a 14-month low at 1.4248.
Speculators have raised their bearish bets on the Canadian dollar to the highest level since December, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Non-commercial net short positions stood at 146,792 contracts as of June 23, up from 132,901 in the prior week and exceeding the net short number of contracts in the yen FX_IDC:USDJPY. (1090741NNET) (1097741NNET)
Canadian gross domestic product data, due on Tuesday, is expected to show the economy expanded 0.4% in April.
The data could help guide expectations for the Bank of Canada policy outlook. BoC Governor Tiff Macklem is due to participate on Wednesday in a panel at a European Central Bank forum on central banking.
"With the BoC on hold at 2.25% and seen as more patient than a hawkish Fed, the loonie is likely to remain hostage to oil and risk sentiment," strategists at Monex Europe said in a note.
The price of oil NYMEX:CL1!, one of major exports, was trading 2.3% higher at $70.79 a barrel after by and Iran underscored the fragility of their interim peace deal, while cautious hopes of a continued recovery in shipping through the Strait of Hormuz limited gains.
"We think a credible Hormuz reopening eases the (U.S.) dollar's haven bid but caps loonie upside via softer oil," the Monex Europe strategists said.
The Canadian 10-year yield (CA10YT=RR) was little changed at 3.384%, holding near the bottom of its range since March.