The Canadian dollar weakened against its U.S. counterpart on Monday as oil prices fell and bond yields settled at a two-week low, with investors awaiting December trade data due on Tuesday and jobs numbers later in the week for signs of economic growth.
The loonie had gained for two straight weeks on a combination of favourable economic data and greenback weakness. Last week, it touched its strongest level since September.
The Canadian dollar settled at $1.3087 to the greenback, or 76.41 cents US, weaker than the Bank of Canada's official close on Friday of $1.3028, or 76.76 cents US.
The loonie traded in a range of $1.3008 to $1.3135.
"We spent two or three days trying to push through $1.30 without any real success," said Darcy Browne, managing director for foreign exchange sales at CIBC Capital Markets.
"It rallied up to $1.3135, which is the 200-day moving average, and got rejected pretty hard from there as well," he said.
Economists polled by Reuters have a wide range of expectations for Tuesday's data after Canada achieved its first trade surplus in more than two years in November.
The most optimistic see a $1.5 billion surplus, while the most pessimistic expect a $1.5 billion deficit. The median view is for a surplus of $350 million after the surprise $526 million surplus in the prior month.
Jobs data is due on Friday, with the market expecting no growth after a bumper 53,700 job gains in December.
U.S. crude oil prices settled down 1.5 per cent at US$53.01 a barrel, while Brent lost 1.9 per cent to US$55.72.
Canadian government bond prices were higher across the maturity curve, with the two-year price up 7.5 cents to yield 0.737 per cent and the benchmark 10-year rising 52 cents to yield 1.701 per cent, its lowest settlement since Jan. 23.
The Canada-U.S. two-year bond spread narrowed to -41.6 basis points, while the 10-year spread came in at -70.9 basis points.
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