TORONTO, June 15 (Reuters) - The Canadian dollar rose against its U.S. counterpart on Monday as a preliminary peace deal between the United States and Iran boosted investor sentiment globally, but the gain was limited ahead of a Federal Reserve interest rate decision this week.
The loonie was trading 0.1% higher at 1.3980 per U.S. dollar, or 71.53 U.S. cents, after moving in a range of 1.3951 to 1.3992. Last Thursday, the currency touched a seven-month low at 1.4023.
Share markets and bonds rallied and oil prices tumbled as the deal was expected to ease inflationary pressures globally and lessen the need for higher interest rates.
"The risk channel should dominate near term now that a deal is being signed," analysts at Monex Europe said in a note. "But, with a hawkish Fed still priced into Wednesday, loonie rallies should prove limited."
New Federal Reserve Chairman Kevin Warsh is expected to address the economic and interest rate outlook in a press conference immediately following the end of the Fed's June 16-17 policy meeting.
Speculators have raised their bearish bets on the Canadian dollar 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 119,999 contracts as of June 9, up from 94,111 in the prior week.
The price of crude oil, one of Canada's major exports, was trading 5.5% lower at $80.23 on the expected reopening of the Strait of Hormuz.
Domestic data for April showed that factory sales grew by 4.2% from March and wholesale trade was up by 0.6%.
Canadian housing starts fell 6% in May from the previous month, which was a smaller decline than expected.
Canadian government bond yields were mixed across a steeper curve.
The 2-year eased 2.6 basis points to 2.734%, after earlier touching 2.702%, its lowest level since March 18.
Reporting by Fergal Smith; Editing by Padraic Cassidy
