Canadian dollar retreats from 2-week high
TORONTO (Reuters) - The Canadian dollar backpedaled from a two-week high against the U.S. dollar on Thursday as market players reduced risky positions ahead of Friday's double serving of jobs reports from Canada and the United States.
The currency began the session firmer, hitting its highest level since May 18 at C$1.0333 to the U.S. dollar, or 96.78 U.S. cents, as oil prices rose and global equity markets rallied on growing investor risk appetite.
It closed at C$1.0412 to the U.S. dollar, or 96.04 U.S. cents, down from Wednesday's close of C$1.0384 to the U.S. dollar, or 96.30 U.S. cents.
"It's following risk flows today. We're stuck in a broader range for the Canadian dollar," said Tyson Wright, senior foreign exchange trader at Custom House, a currency services firm.
Canada's dollar absorbed tepid May U.S. retail sales data on Thursday as well as reports that the U.S. added private-sector jobs in May and that jobless claims dipped in the latest week. But the main course is the U.S. May jobs report on Friday, which may provide vital evidence on the state of economic recovery.
According to a Reuters poll, U.S. nonfarm payrolls probably recorded a fifth straight month of gains in May, but survey respondents said more than two-thirds of the projected 513,000 jobs will be temporary hires for the U.S. census.
Canadian job statistics are also on tap on Friday, with a median forecast for a net gain of 12,500 jobs in May after a record gain of 108,700 in April. The median forecast for the unemployment rate is 8.1 percent.
"If Canada can post solid employment data to follow up on last month's impressive numbers, then this trend will probably be skewed slightly to the downside for dollar/Canada as the fundamental backdrop is very favorable for more (Canadian) interest rate hikes," Wright said.
The Bank of Canada raised its key interest rate on Tuesday, the first G7 industrialized economy to do so after the global recession. Rate rises are likely to be a driving force for further Canadian dollar strength in the short and medium term, though European debt woes may cap gains, a Reuters poll found on Thursday. Continued...