By Fergal Smith

TORONTO (Reuters) – The Canadian dollar edged lower against its U.S. counterpart on Monday as Federal Reserve Chair Jerome Powell kept in check expectations for another supersized interest rate cut, but the loonie held on to much of its quarterly advance.

The loonie was trading 0.1% lower at 1.3530 to the U.S. dollar, or 73.91 U.S. cents, after touching its weakest level since Sept. 24 at 1.3537.

For the month, the currency lost 0.3%, while it notched a third-quarter gain of 1.1%.

The Canadian dollar’s move on Monday was “more related to (U.S.) dollar strength” as investors reassessed prospects of another larger-than-usual interest rate cut by year end, said Amo Sahota, director at Klarity FX in San Francisco.

The U.S. dollar rose against a basket of major currencies and U.S. bond yields climbed as Powell said that Fed policy was not on a preset course and that the risks are “two-sided”.

Investors see a 65% chance the Fed will cut by a quarter of a percentage point in November rather than repeating the half-percentage-point move from earlier this month.

Speculators have cut their bearish bets on the Canadian dollar to the lowest level since April, data from the U.S. Commodity Futures Trading Commission showed on Friday.

As of Sept. 24, net short positions had decreased to 65,589 contracts from 73,150 in the prior week.

The price of oil, one of Canada’s major exports, settled 1 cent lower at $68.17 a barrel on Monday as concerns about waning global demand offset fears of a widening Middle East conflict.

Unionized workers have begun a three-day strike at two terminals of the port of Montreal as talks over a new contract have yet to result in a labor agreement.

Canada’s bond market was closed for the National Day for Truth and Reconciliation.

(Reporting by Fergal Smith; editing by Jonathan Oatis)