The Canadian dollar weakened slightly against its U.S. counterpart on Monday and Canadian bond yields jumped, as investors weighed tentative hopes of progress in Russia-Ukraine peace talks and rising coronavirus cases in China.
Equity markets globally edged higher and the safe-haven U.S. dollar dipped after Russia and Ukraine gave their most upbeat assessment yet of prospects for talks, while the price of oil, one of Canada’s major exports, was down 5.7% at $103.10 a barrel.
Limiting the upswing in sentiment was a tightening of restrictions to curb the spread of the coronavirus in the southern Chinese city of Shenzhen. That’s a move that could add to pressure on global supply chains, worsening the outlook for inflation.
Canada’s consumer price index report for February is due on Wednesday, with economists expecting inflation to climb even further after it reached a 30-year high in January.
The Canadian dollar was 0.1% lower at 1.2762 to the greenback, or 78.36 U.S. cents, after trading in a range of 1.2728 to 1.2789.
Speculators have cut their bullish bets on the Canadian dollar to the lowest in seven weeks, data from the U.S. Commodity Futures Trading Commission showed. As of March 8, net long positions had fallen to 7,646 contracts from 14,140 in the prior week.
Investors braced for a busy week of major central bank meetings, with the Federal Reserve expected to begin an interest rate hike cycle on Wednesday.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year climbed 10.7 basis points to 2.099%, its highest level since December 2018.
(Reporting by Fergal Smith; editing by Grant McCool)
