Canadian bonds gain following weakness in energy prices; Poloz’s speech in focus

The Canadian government bonds gained Monday as crude oil prices declined ahead of the OPEC meeting.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 2-1/2 basis points to 1.54 percent, the yield on long-term 30-year note dipped 1/2 basis point to 2.12 percent and the yield on short-term 2-year bond slid 1/2 basis point to 0.66 percent by 12:30 GMT.

The Canadian bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the Bank of Canada's target.

Crude oil prices fell after Saudi Arabia cancels its meeting with non-OPEC members, including Russia. The International benchmark Brent futures fell 0.68 percent to $47.90 and West Texas Intermediate (WTI) dipped 1.02 percent to $45.59 by 12:00 GMT.

Moreover, wholesale sales in Canada posted a surprise decline during the month of September, following weakness in demand for machine tools and equipment that disappointed sellers at the start of the fourth quarter.

Canadian wholesale sales declined 1.2 percent in September compared with expectations of a 0.3 percent increase for the month and followed a 0.8 percent gain the previous month, data released by Statistics Canada showed Monday. The annual increase slowed to 2.8 percent while, in volume terms, there was a 2.6 percent annual increase after a 1.5 percent monthly decline.

Lastly, investors will remain keen to focus on the upcoming economic data, highlighted by Q3 GDP and November unemployment change. The Bank of Canada Governor Stephen Poloz is also expected to speak on November 29.

Lastly, Canadian stocks may struggle to recover its winning track Monday morning amid sluggish commodities.

The S&P/TSX Composite Index closed flat at 15,075.44 on Friday. While at 12:00 GMT, the FxWirePro's Hourly Canadian Dollar Strength Index remained slightly bearish at -83.59 (lower than -75 represents bearish trend).