The Canadian dollar rose to its
highest level in more than two weeks against its broadly weaker
U.S. counterpart on Thursday as oil prices jumped and investors
braced for a key U.S. jobs report.
The loonie was trading 0.5% higher at 1.2554 to the
greenback, or 79.66 U.S. cents, having touched its strongest
level since Aug. 16 at 1.2547.
“Oil is having a pretty strong performance,” said Andrew
Cherry, head of global markets at HSBC Bank Canada. “I wouldn’t
be surprised too with (U.S.) payrolls tomorrow, that heading
into a long weekend, that there is also a lot of position
squaring going on.”
The price of oil , one of Canada’s major exports,
settled 2% higher at $69.99 a barrel after U.S. crude
inventories fell more than anticipated, while the U.S. dollar
weakened against a basket of major currencies.
Canadian financial markets are due to be closed on Monday
for the Labour Day holiday.
The U.S. jobs figures on Friday could offer clues on the
timing of the Federal Reserve’s stimulus taper. The Bank of
Canada, which is also buying bonds to support the economy, is
due to make an interest rate decision next week.
“I think given what we’ve seen this week with the Q2
numbers, the data for GDP, and the Delta (coronavirus) variant,
I think it has taken any talk of (the BoC) accelerating tapering
off the table,” Cherry said.
The BoC last cut bond purchases in July.
Canada’s economy surprisingly contracted in the second
quarter, missing forecasts for a 2.5% advance, data on Tuesday
On Thursday, data showed that Canada’s trade surplus
narrowed to C$778 million in July from a revised C$2.6 billion
Canadian government bond yields eased across the curve, with
the 10-year down 1.7 basis points at 1.164%.