Canadian dollar recoups weekly loss as investors shrug off jobs decline

Toronto

THE Canadian dollar strengthened against its US counterpart on Friday as oil prices rose and investors weighed US and Canadian employment data, with the currency recovering from its weakest intraday level in more than one week.

The loonie was trading 0.3 per cent higher at 1.2075 to the greenback, or 82.82 US cents, having recovered from its weakest level since May 27 at 1.2133 earlier in the session. It was nearly unchanged for the week.

Canada lost 68,000 jobs in May, a bigger decline than expected, as lockdowns imposed to curb a harsh third wave of Covid-19 continued to weigh on the economy, Statistics Canada data showed.

"Below the surface, the number is a little bit better than it looks and overall the Canadian dollar isn't going to be flustered by a lockdown-induced soft number," said Adam Button, chief currency analyst at ForexLive.

Canada's currency has been on a tear this year, bolstered by higher commodity prices and the Bank of Canada's more hawkish stance. The central bank is due to make an interest rate decision on Wednesday.

Analysts have raised their forecasts on the loonie as a proposed infrastructure spending package in the US bolsters prospects for the global economy, a Reuters poll showed.

The price of oil, one of Canada's major exports, settled 1.2 per cent higher at US$69.62 a barrel as Opec+ supply discipline and recovering demand countered concerns about patchy Covid-19 vaccination rollout around the globe.

The US dollar fell against a basket of major currencies after US nonfarm payrolls rose less than was expected, tempering expectations that the Federal Reserve will tighten monetary policy sooner, rather than later.

Canadian government bond yields were lower across a flatter curve, tracking the move in US Treasuries. The 10-year eased 6 basis points to 1.460 per cent, its lowest since May 26. REUTERS