By Fergal Smith

TORONTO (Reuters) – The Canadian dollar steadied against its U.S. counterpart on Monday as the bond market’s enthusiasm about the choice of U.S. Treasury secretary offset a drop in oil prices and caution ahead of comments by a Bank of Canada policymaker.

The loonie was trading nearly unchanged at 1.3978 per U.S. dollar, or 71.54 U.S. cents, after moving in a range of 1.3928 to 1.4007. Last week, the currency rallied 0.8%, its biggest weekly gain since August.

“There are some factors netting each other out,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.

U.S. Treasury yields declined sharply and the U.S. dollar gave back some recent gains against a basket of major currencies as investors bet that the nomination of Scott Bessent as U.S. Treasury secretary would lead to a more moderate than feared U.S. fiscal trajectory.

The price of oil, one of Canada’s major exports, settled 3.2% lower after multiple reports that Israel and Lebanon had agreed to the terms of a deal to end the Israel-Hezbollah conflict.

Bank of Canada Deputy Governor Rhys Mendes is due to speak on Tuesday on monetary policy, the last scheduled appearance by a BoC policymaker before the Dec. 11 interest rate decision.

“Any information will be dissected by the market,” Richardson said, adding that hotter-than-expected Canadian inflation data last week has cooled expectations for another outsized interest rate cut from the central bank next month.

Still, speculators have raised their bearish bets on the Canadian dollar to the highest level since July, data from the U.S. Commodity Futures Trading Commission showed. As of Nov. 19, net short positions had edged up to 183,566 contracts from 182,389 in the prior week.

Canadian bond yields tracked U.S. Treasury yields lower. The 10-year was down 11.1 basis points at 3.316%.

(Reporting by Fergal Smith; Editing by Aistair Bell)