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he Canadian dollar weakened against the greenback on Monday, pulled lower by weaker oil prices and as investor risk aversion rattled world markets. The loonie also suffered from the overhang of disappointing labor market data last Friday that showed the Canadian economy unexpectedly shed jobs in August. Data released Monday morning showed the value of domestic building permits had a surprise surge in July, but that did little to stem the loonie's weakness. The Canadian dollar strengthened against the British pound, however, as sterling was hit by worries that Scotland might split from the rest of Britain. The concerns spilled over to markets more broadly. Brent crude fell below $100 a barrel for the first time in 14 months. An opinion poll released over the weekend showed supporters of Scottish independence in the lead for the first time ahead of a referendum set for Sept. 18. "It's another disruptive event out there," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto, said of the Scottish vote. "In that world of the geopolitical, it's one more risk factor that no one quite knows how it will end up and ultimately unfold if there was the 'yes' vote." The Canadian dollar was at C$1.0910 to the greenback, or 91.66 U.S. cents, weaker than Friday's close of C$1.0881, or 91.90 U.S. cents. The loonie has seen some choppy trading in the last two weeks with significant moves both up and down, but analysts expect it will be comfortable trading around the C$1.09 mark for now. Some of the large gains at the end of August had been due to fund flow speculation on the back of Burger King's bid to buy Canada's Tim Hortons coffee and snacks chain. "In the lack of any big Canadian dollar buying that we had seen previously from some of the M&A transactions, the data itself has been a little bit of a let down," Mikolich said. "The C$1.0850 to C$1.0950 range still remains largely intact." Canadian government bond prices were higher across the maturity curve, with the two-year up half a Canadian cent to yield 1.112 percent, and the benchmark 10-year up 15-1/2 Canadian cents to yield 2.102 percent.
Source: Reuters

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