TORONTO, Jan 5 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as investors weighed the potential of Venezuelan crude displacing some of the supply to the United States from Canada's energy sector.
The loonie was trading 0.2% lower at 1.3755 per U.S. dollar, or 74.21 U.S. cents, after touching its weakest intraday level since Dec. 10 at 1.3815. It was the only G10 currency to lose ground against the greenback.
"I think that Canada might be one of the losers from the U.S. invasion of Venezuela," Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "I think the big winners are the U.S. refiners on the gulf. They're going to be able to have more secure supply lines for that heavy crude."
U.S. oil companies' shares jumped, fueled by the prospect of access to Venezuela's vast oil reserves after President Donald Trump said the U.S. would take control of the South American nation following the arrest of its president.
Canada, like Venezuela, produces a heavy type of crude, much of which it sends to U.S. refineries for processing. The energy index (.SPTTEN), on the Toronto Stock Exchange was down more than 3%.
The Bank of Canada has signaled a potential end to its interest rate cutting campaign and Canadian Prime Minister Mark Carney has committed to invest billions of dollars on infrastructure as well as measures to raise productivity and competitiveness.
"I thought that the fiscal plans of Carney, expanding fiscal policy, so that combination of looser fiscal, tighter monetary (policy) was going to be good for the currency and I still think it will be but we've got to get past this first part of the year," Chandler said.
U.S. crude oil futures settled 1.7% higher at $58.32 a barrel as traders assessed the possible impact on crude flows from Venezuela.
Canadian bond yields moved lower across the curve. The 10-year was down 4.8 basis points at 3.424%.
Reporting by Fergal Smith
