By Alastair Sharp
TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Monday after falling more than 2 percent last week, but traded in a narrow range ahead of upcoming domestic trade and employment data.
Last week’s losses for the loonie came as U.S. Federal Reserve Chair Janet Yellen cemented the view that the Fed will raise interest rates at its March 14-15 meeting.
In contrast, the Bank of Canada held rates steady on Wednesday as it stayed focused on the “significant uncertainties” facing the economy, including the policies of U.S. President Donald Trump.
“We grind forward to the employment data for North America at the end of the week,” said Darcy Browne, managing director for foreign exchange sales at CIBC Capital Markets.
He said a solid U.S. jobs report for February on Friday would be unlikely to weigh heavily on the Canadian currency given a March hike by the Fed is almost completely priced in at this point, while a February pullback in Canadian job growth after several large gains also would not be a surprise.
“I don’t see the loonie getting completely stomped on,” he said. “The Canadian data isn’t that bad.”
Policy divergence will pressure the loonie over the coming months, a Reuters poll predicted.
The Canadian dollar CAD=D4 settled at C$1.3410 to the greenback, or 74.57 U.S. cents, slightly weaker than Friday’s close of C$1.3379, or 74.74 U.S. cents.