TORONTO (Reuters) - The Canadian dollar weakened against the U.S. dollar on Friday after contrasting U.S. and Canadian employment data, while crude oil fell as OPEC maintains its policy of pumping near-record volumes of oil despite a supply glut.
But the limited nature of the weakening and apparent rejection of a move above C$1.34 confounded market participants who said the day’s developments suggested a steeper loss was deserved for the loonie.
“Combine the jobs number with crude being at $40 you would think the Canadian dollar should be weaker,” said David Bradley, director of foreign exchange trading at Scotiabank.
Canada shed more jobs than expected in November, while exports tumbled in October, suggesting the economy was off to a weak start in the final quarter of 2015 after just recently emerging from a mild recession.
Meanwhile, a sturdy increase in U.S. employment most likely paved the way for the Federal Reserve to raise interest rates this month for the first time in nearly a decade.
To top it off, prices for crude oil, a major Canadian export, fell after news the Organization of the Petroleum Exporting Countries planned to maintain its production near record highs despite depressed prices, as the producer group continued to guard its share of an oversupplied market.
The Canadian dollar CAD=D4 ended the day trading at C$1.3377 to the greenback, or 74.76 U.S. cents, weaker than Thursday’s close of C$1.3338, or 74.97 U.S. cents.
The currency’s strongest level of the session was C$1.3318, while it hit its weakest in 11 days at C$1.3416 soon after the twin jobs reports came out before quickly paring those losses.
Scotiabank’s Bradley said sharp jumps in the intraday price suggested a lack of liquidity in the currency pair.
The loonie strengthened against the euro a day after a sharp slide versus the common currency.
Canadian government bond prices were higher across the maturity curve, after having sold off on Thursday in sympathy with German Bunds after European Central Bank easing was less aggressive than some investors expected.
The two-year CA2YT=RR price was up 4.5 Canadian cents to yield 0.629 percent and the benchmark 10-year CA10YT=RR rose 36 Canadian cents to yield 1.581 percent.
Additional reporting by Fergal Smith; Editing by Lisa Shumaker