By Fergal Smith

TORONTO (Reuters) – The Canadian dollar weakened slightly against its U.S. counterpart on Monday as oil prices tumbled and investors weighed prospects of U.S. trade tariffs that could hurt Canada’s economy.

The loonie was trading 0.1% lower at 1.3915 to the U.S. dollar, or 71.86 U.S. cents, after clawing back some of its earlier decline. The currency moved in a range of 1.3896 to 1.3950. Earlier this month, it touched a two-year low at 1.3959.

“Risks for the loonie still appear skewed to the downside, influenced by U.S. tariffs and increased oil production under a second Trump mandate, which may negatively affect Canada’s export revenues if he follows through on his proposals,” said Eduardo Moutinho, a market analyst at Ebury.

U.S. President-elect Donald Trump has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States, including oil.

The price of oil fell 3.1% to $68.21 a barrel after China’s stimulus plan disappointed investors and as the U.S. dollar added to recent gains against a basket of major currencies.

“The domestic economic landscape is also becoming less favourable, with increasing signs of deterioration in the labour market,” Moutinho said.

Canada added fewer jobs than expected in October as the economy struggled to absorb the slack built up due to a rapidly increasing labor force.

The loonie’s decline on Monday was the smallest among the Group of Ten currencies. Canada’s bond market was closed on Monday in observance of Remembrance Day.

Still, speculators have raised their bearish bets on the Canadian dollar to the highest level since mid-August, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Nov. 5, net short positions had increased to 175,229 contracts from 167,499 in the prior week.

(Reporting by Fergal Smith; Editing by Alistair Bell)