Canadian dollar firms slightly on positive market sentiment

Mon May 6, 2013 5:01pm EDT
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar was marginally stronger against its U.S. counterpart on Monday, tracking positive market sentiment following Friday's surprising U.S. monthly jobs report.

The benchmark S&P 500 index edged up to another record closing high on Wall Street, extending Friday's rally after U.S. employment rose more than expected last month. <MKTS/GLOB>

The loonie strengthened after the release of Canadian building permits data, which surged past expectations in March, though the closely-watched residential, single family component was more subdued.

"Once again, it's a situation where on the surface, things look good for the Canadian dollar, but the domestic factors really weren't that strong, so lets chalk this up to basic risk-on move," said Mark Chandler, head of Canadian fixed-income and currency strategy at RBC Capital Markets.

The Canadian dollar, which was stronger against other major currencies, finished its North American session at C$1.0068 against the U.S. dollar, or 99.32 U.S. cents, weaker than Friday's close at C$1.0078, or 99.23 U.S. cents.

The Canadian currency weakened briefly following the release of Ivey Purchasing Managers Index data that showed the pace of business purchasing slowed more severely than expected in April.

The currency's movements were expected to be mostly subdued until Friday's Canadian employment data. The report is expected to show the economy added 15,000 jobs in April, while the unemployment rate held steady at 7.2 percent, according to a Reuters survey of analysts.

"We're going to wait until Friday's employment numbers in Canada before things get a little bit more exciting on the Canadian dollar front," Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets.   Continued...

The Canadian 20 dollar bill made of polymer is displayed at the Bank of Canada in Ottawa May 2, 2012. REUTERS/Chris Wattie