Canadian dollar slips on soft data ahead of jobs reports

Thu Jan 6, 2011 5:05pm EST
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By Ka Yan Ng

TORONTO (Reuters) - Canada's dollar dipped slightly against its U.S. counterpart on Thursday, weighed by soft North American data and retreating commodity prices.

A report showed new U.S. claims for jobless benefits moved higher last week, though a decline in the four-week average to a nearly 2-1/2-year low suggested the trend toward a better labor market remains intact.

It was followed by a report that showed Canadian purchasing activity stalled in December.

The Canadian currency had benefited from increased optimism about the U.S. economic recovery, which was boosted by surprisingly firm private employers jobs data out this week. The United States is Canada's largest trading partner and a pickup in demand there could boost the export sector.

Still, the Canadian dollar finished above parity with the U.S. dollar for a fourth straight session, ending at C$0.9969 to the U.S. dollar, or $1.0031. This compared with Wednesday's close at C$0.9964 to the U.S. dollar, or $1.0036.

Analysts said the market was now firmly focused on U.S. and Canadian jobs data out on Friday.

"The market has taken back some of the long Canada positions ahead of tomorrow's payroll numbers," said Jack Spitz, managing director of foreign exchange at National Bank Financial.

A drop in commodity prices -- with oil off more than 2 percent to below $89 a barrel -- also temporarily put a lid on the Canadian dollar's gains, said Spitz.   Continued...