TORONTO, June 8 (Reuters) - The Canadian dollar weakened to a two-month low against its U.S. counterpart on Monday, as investors awaited a Bank of Canada policy decision this week and after recent data showed speculators increasing their bearish bets on the currency.
The loonie was trading 0.1% lower at 1.3950 per U.S. dollar, or 71.68 U.S. cents, after touching its weakest intraday level since March 31 at 1.3961.
Bearish bets by speculators on the Canadian dollar rose to the highest level since December, data from the U.S. Commodity Futures Trading Commission showed on Friday. Non-commercial net short positions stood at 94,111 contracts as of June 2, up from 68,882 in the prior week.
"Speculative shorts in CAD have increased as the market leans into a combination of wider U.S.-Canada rate differentials, weaker Canadian growth momentum, and lingering uncertainty around the CUSMA review," said Kevin Ford, an FX & macro strategist at Convera.
The United States-Mexico-Canada Agreement - known as CUSMA in Canada - has shielded much of Canada's exports from U.S. tariffs. It is set for review by a July 1 deadline.
Recent first-quarter GDP data showed that Canada's economy slipped into a surprise technical recession.
"The BoC messaging this week will be closely monitored to gauge if those spec positions hold," said Amo Sahota, a director at Klarity FX in San Francisco.
The Bank of Canada will hold its key overnight rate at 2.25% on Wednesday and for the rest of the year, according to a majority of economists polled by Reuters, despite rising inflation risks stemming from higher energy prices.
The price of oil , one of Canada's major exports, pared its earlier gains to settle 0.8% higher at $91.30 a barrel after Iran and Israel said they had halted attacks on each other.
Canadian bond yields were mixed across a steeper curve, with the 10-year up 2.9 basis points at 3.502%.
Reporting by Fergal Smith; Editing by Nia Williams
