Canadian dollar hits 4-month low as Omicron fears grow

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday as surging Omicron coronavirus cases and a setback to prospects for a U.S. domestic spending bill weighed on investor sentiment.

Global shares fell as the spread of the variant saw the Netherlands go into lockdown this weekend and put pressure on others to tighten restrictions.

Adding to pressure on stocks, U.S. Senator Joe Manchin said on Sunday that he would not support President Joe Biden's $1.75 trillion "Build Back Better" investment bill.

Canada sends about 75% of its exports to the United States, including oil.

U.S. crude prices fell 4.4% to $67.73 a barrel, while the Canadian dollar was trading 0.4% lower at 1.2932 to the greenback, or 77.33 U.S. cents. The currency touched its weakest intraday level since Aug. 20 at 1.2940.

Speculators have raised their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Dec. 14, net short positions had increased to 13,128 contracts from 9,358 in the prior week.

Canadian retail sales data for October is due on Tuesday, which could help guide expectations for the Bank of Canada policy outlook.

With inflation surging, the central bank is likely to change its interest rate guidance in 2022 so that it has the option to raise borrowing costs earlier than planned despite the threat the Omicron variant poses to growth, analysts said.

Canadian government bond yields were mixed across the curve. The 10-year rate hit its lowest level since Sept. 23 at 1.282% before recovering to 1.318%, unchanged on the day.

(Reporting by Fergal Smith; Editing by Paul Simao)