The Canadian dollar CADUSD was little changed against its U.S. counterpart on Monday, arresting its recent decline, as oil prices rose and traders awaited domestic inflation data that could offer clues on the prospect of interest rate cuts.
The loonie was trading nearly unchanged at 1.3535 to the U.S. dollar, or 73.88 U.S. cents, after hitting a nine-day low at 1.3551 on Friday.
“A rebound in U.S. equities and firmer WTI crude oil prices have helped to stall last week’s CAD weakness, with the market likely to tread water until the release of tomorrow’s Canadian CPI report for February,” said George Davis, chief technical strategist at RBC Capital Markets.
The price of oil, one of Canada’s major exports, rose to a four-month high on lower crude exports from Iraq and Saudi Arabia and signs of stronger demand and economic growth in China and the United States. U.S. crude futures settled up 2.1 per cent at $82.72 a barrel.
Canadian consumer price index data for February, due on Tuesday, is expected to show inflation increasing to an annual rate of 3.1 per cent from 2.9 per cent in January.
Earlier this month, the Bank of Canada said that underlying inflation was too high to consider easing as it kept its benchmark rate on hold at a 22-year high of 5 per cent.
Data on Monday showed that Canadian home sales fell 3.1 per cent in February after strong growth in the previous two months, while prices steadied after five straight months of declines.
Canada’s federal budget is likely to allocate billions of dollars for investing in building homes and low-cost housing programs, Housing Minister Sean Fraser said.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasury yields. The 10-year was up 5.6 basis points at 3.603 per cent, its highest level since Feb. 16.