TORONTO (Reuters) - The Canadian dollar strengthened slightly against the U.S. dollar on Wednesday despite softer crude oil prices, as investors continued to digest last Friday’s surprisingly robust domestic jobs report.
The loonie extended gains made on Tuesday, when trading was muted due to the closure of bond markets for Remembrance Day in Canada and for Veterans Day in the United States.
The Canadian dollar, which hit a more than five-year low last week, has recouped some of those losses since the release of the positive Canadian employment report on Friday, but analysts expect the loonie to remain around the C$1.13 level in the near term.
The commodities-linked currency, hurt by a broad U.S. dollar rally over the last several months, has also been hit hard by a sharp drop in crude prices. Canada is a major oil exporter.
“You’re getting a bit of consolidation. I think the markets are still digesting the solid jobs report that we got last Friday,” said Bipan Rai, director of foreign exchange strategy at CIBC World Markets, who said the Canadian dollar could strengthen to C$1.1250 in the short term.
“We fully expect the market to sell the loonie on those dips and still have that bias to buy U.S. dollar against it.”
At 9:27 a.m. (1427 GMT), the Canadian dollar CAD=D4 was trading at C$1.1307 to the greenback, or 88.44 U.S. cents, stronger than Tuesday’s market close of C$1.1335, or 88.22 U.S. cents.
With little market-moving domestic data on tap over the next few sessions, market participants will look at U.S. figures to see if they continue to show a strengthening U.S. economy and signal what impact that may have on U.S. Federal Reserve policy.
Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR up 4 Canadian cents to yield 1.015 percent and the benchmark 10-year CA10YT=RR rising 12 Canadian cents to yield 2.045 percent.
Editing by Peter Galloway