TORONTO, Feb 10 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday but the move was limited as investors weighed the threat of U.S. steel and aluminum tariffs against recent upbeat data for the domestic economy.
The loonie was trading 0.1% lower at 1.4310 per U.S. dollar, or 69.88 U.S. cents, after trading in a range of 1.4289 to 1.4379.
U.S. President Donald Trump is expected to introduce new 25% tariffs on Monday or Tuesday on all U.S. steel and aluminum imports, on top of existing metals duties, in another major escalation of his trade policy shakeup.
Canada is a major exporter of steel to the United States and it accounted for 79% of U.S. primary aluminum imports in the first 11 months of 2024.
"There are meaningful consequences for both countries," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.
"While tariff concerns remain paramount for policymakers right now, evidence of very firm growth momentum late last year and into Q1 suggest the Bank (of Canada) can afford to await developments before judging whether more accommodation is needed."
Canada's economy added 76,000 jobs in January, eclipsing expectations for a gain of 25,000, and the unemployment rate unexpectedly dipped to 6.6%, data on Friday showed.
Still, speculators have raised their bearish bets on the Canadian dollar, separate data on Friday from the U.S. Commodity Futures Trading Commission showed. As of Feb. 4, net short positions had increased to 160,444 contracts from 147,601 in the prior week.
Canadian bond yields eased across a steeper curve. The 2-year fell 4.5 basis points to 2.651%, while it was trading a further 3.7 basis points below the U.S. equivalent to a spread of about 162 basis points.
That is nearly the largest gap since September 1997.
Reporting by Fergal Smith; Editing by Rod Nickel
