The Canadian dollar was little changed against the greenback on Friday, as stronger-than-expected domestic jobs data helped support the currency after it was pressured this week by falling oil prices.
At 3:52 p.m., the Canadian dollar was trading nearly unchanged at 1.3059 to the greenback, or 76.58 U.S. cents. The currency, which on Thursday hit its weakest intraday level in nearly two weeks at 1.3104, traded in a range of 1.3029 to 1.3075.
For the week, the loonie was down 0.5 per cent, giving back some of the 5 per cent gain it posted in 2019, when it was the top-performing G10 currency.
“The market still likes the Canadian dollar and doesn’t want to go into a weakening cycle for it,” said Amo Sahota, director at Klarity FX in San Francisco. “It was a darling at the end of last year and the market wants to bank on that at the beginning of this year.”
Speculators have more-than doubled their bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Jan. 7, net long positions had increased to 26,367 contracts from 11,913 in the prior week.
“It is one of the better positioned G10 currencies out there from the economics and the monetary policy side,” Sahota said.
Canada’s economy added 35,200 jobs in December, exceeding the gain of 25,000 that economists had forecast, while the unemployment rate fell to 5.6 per cent, official data showed.
Chances that the Bank of Canada would cut interest rates by July fell to about 30 per cent from nearly 40 per cent before the release of the data, the overnight index swaps market showed.
The central bank left its benchmark rate on hold at 1.75 per cent in 2019 even as some of its counterparts, such as the Federal Reserve, eased.
U.S. crude oil futures settled 0.9 per cent lower at $59.04 a barrel, adding to their decline since Wednesday, when the threat of a wider conflict between the United States and Iran receded. Oil is one of Canada’s major exports.
Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 4 cents to yield 1.659 per cent and the 10-year rising 11 cents to yield 1.592 per cent.
Canada’s 2-year yield rose 2.9 basis points further above the yield on its U.S. counterpart to a spread of 9.1 basis points, after U.S. data showed a weaker-than-expected December jobs gain.
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