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TORONTO (Reuters) - The Canadian dollar was steady around parity versus the U.S. dollar on Wednesday as oil stuck close to a record high and the market opted to reacquaint itself with North American currencies.
Domestic bond prices, with no key data to influence a move, were mostly flat across the curve as dealers awaited the key Canadian jobs report due later this week.
At 9:15 a.m., the Canadian unit was at C$1.0027 to the U.S. dollar, or 99.73 U.S. cents, up from C$1.0029 to the U.S. dollar, or 99.71 U.S. cents, at Tuesday's close.
Helping keep the Canadian dollar within striking distance of parity versus the greenback, which it topped on Tuesday for the first time in two weeks, was lofty oil prices and a sense that the worst is over for the U.S. economy.
Oil prices, which often dictate direction for Canada's commodity-linked currency, remained in sight of a record high above $122 a barrel hit during Tuesday's session.
And a sense that economic conditions in the United States, Canada's biggest trading partner, are starting to improve made North American currencies more attractive.
"Oil prices are probably a modest support for the Canadian dollar, but I think generally it's a reflection of we're sort of back to the buy North America attitude," said Shaun Osborne, chief currency strategist at TD Securities.
"We've kind of been primed for a little bit more spillover from the U.S. slowdown into the Canadian economy over the last little while, and if the (U.S.) economy really is through the worst then investors are generally taking the view that the outlook for Canada can't be quite as bad."
Movements in the Canadian dollar could be muted ahead of the key Canadian jobs report for April due out on Friday. The market is looking for the economy to have added 10,000 jobs, but the range of forecasts is from a loss of 10,000 jobs to a gain of 30,000 jobs."
"Something towards the upper end of that range would probably be good enough to actually see the Canadian dollar extend this run a little bit," said Osborne.
The Canadian dollar rose to a two-week high of US$1.0001, valuing a U.S. dollar at 99.99 Canadian cents, in the previous session due to the rise in oil prices and domestic data that offered reason for optimism.
Canadian bond prices fell but the selloff was rather muted as dealers avoided major commitments until catching a glimpse of Friday's jobs data.
The next piece of Canadian data due out is April housing starts on Thursday.
"We might see a little reaction to the housing starts number but due to the fact that it's coming out ahead of the labor force survey I see it being generally muted," said Max Clarke, economist at IDEAglobal in New York.
"The employment picture in Canada has remained fairly solid and I think if we have another solid response you should probably see extended selling into the weekend."
The overnight Canadian Libor rate was 3.0083, down from, 3.0266 on Monday.
Tuesday's CORRA rate was 2.9889 percent, down from 3.0014 percent on Monday. The Bank of Canada publishes the previous session's rate at around 9 a.m. daily.
The two-year bond was down 8 Canadian cents at C$101.79 to yield 2.850 percent. The 10-year bond slid 3 Canadian cents to C$102.38 to yield 3.688 percent.
The yield spread between the two- and 10-year bonds was 83.8 basis points, down from 87.3 at the previous close.
The 30-year bond shed 5 Canadian cents to C$113.75 to yield 4.178 percent. In the United States, the 30-year treasury yielded 4.668 percent.
The three-month when-issued T-bill yielded 2.61 percent, up from 2.59 percent at the previous close.
Reporting by Frank Pingue; Editing by Scott Anderson