The loonie was off 0.11 of a cent at 93.88 cents US as traders also took in comments Sunday from federal Finance Minister Jim Flaherty, who said in a TV interview that Canada could face global pressure to raise interest rates in 2014.
The central bank, which works closely with the Finance Department but is historically an independent policy-maker, has signalled that rate hikes are not likely until next year.
But pressure to raise rates could come sooner as the U.S. Federal Reserve lets up on its massive US$85 billion of bond purchases and the American economy improves, which in turn would help the domestic economy.
"I think the pressure will be there because the Fed in the U.S. should stop printing money and taper off as they say," Flaherty said on CTV's Question Period.
"And the OECD and the IMF have both said to Canada (that) we ought to let our interest rates go up a bit."
On the economic front, U.S. factory orders rose 1.8 per cent in November, better than the 1.7 per cent gain that economists had forecast.
But the latest reading on the American non-manufacturing sector disappointed. The Institute for Supply Management's service sector index came in at 53, against the 55.1 reading that had been expected.
Markets are also waiting for the mid-week release of minutes from the Federal Reserve’s meeting in December. The Fed announced it would start to cut back on stimulus by $10 billion a month starting in January. The Fed has kept long-term rates low and supported a strong rally on stock markets by buying $85 billion a month of bonds.
Traders will look for indications of when the Fed will accelerate that tapering and for the central bank’s latest take on the economy.
The Fed said in December that further tapering would be linked to the economic recovery, in particular employment growth, so Friday’s U.S. non-farm payrolls report is of special interest. Economists look for the U.S. economy to have created about 195,000 jobs in December.
Canadian employment figures also come out on Friday and the consensus calls for the economy to have cranked out 13,000 jobs last month.
Overseas, traders will take in the latest trade, inflation and loans data from China later in the week. Two surveys last week showed manufacturing activity has weakened in December, which analysts said pointed to a downturn in business cycle.
Commodities were negative with the February crude contract on the New York Mercantile Exchange down 53 cents to US$93.43 a barrel.
Crude fell six per cent last week due to growing inventories in the U.S. and an expected recovery in Libyan production.
February bullion dipped 60 cents to US$1,238 an ounce while March copper was unchanged at US$3.36 a pound.Suggest a correction