TORONTO, March 11 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Monday as the recent rally in equity markets lost momentum ahead of a key U.S. inflation report this week.
The loonie fell 0.1% lower to 1.3485 per U.S. dollar, or 74.16 U.S. cents, after trading in a range of 1.3470 to 1.3509. On Friday, the currency touched its strongest intraday level in four weeks at 1.3417.
"Canadian economic data will be light this week so the focus will be on the U.S. inflation report," said Tony Valente, senior FX dealer at AscendantFX.
"I suspect a firm number will lend support to the USD this week and should stop the one-sided trade. ... The USD has been sold (recently) on the back of a risk-on trade in equity markets."
Wall Street's main stock indexes slipped as investors turned attention to the release on Tuesday of the U.S. consumer price index report for February. The data could provide clues on whether inflation has eased enough for the Federal Reserve to begin cutting interest rates.
The Bank of Canada said on Wednesday it was too early to consider easing rates as it kept its benchmark rate on hold at a 22-year high of 5%. On Friday, data showed Canada's economy adding more jobs than expected in February.
Still, speculators have raised their bearish bets on the Canadian dollar , U.S. Commodity Futures Trading Commission data released on Friday showed. As of March 5, net short positions had increased to 19,837 contracts from 1,378 in the prior week.
The price of oil , one of Canada's major exports, was down 0.2% at $77.85 a barrel as concern faded about fighting in the Middle East disrupting supply, while the Canadian 10-year yield rose 1.9 basis points to 3.357%.
Reporting by Fergal Smith; Editing by Richard Chang
