TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday, pulling back from a nearly 10-month high the day before, as oil prices tumbled and investors braced for domestic jobs data due later in the week.
The loonie had rallied in six of the seven previous sessions, boosted by rising expectations that the Bank of Canada will raise interest rates as early as next week.
“The rally in the Canadian dollar has been somewhat halted today” by the “jolt” to oil prices, said Darren Richardson, senior corporate dealer at CanadianForex.
Oil prices CLc1 retreated about 4 percent, ending their longest bull run in more than five years, as climbing exports from the Organization of the Petroleum Exporting Countries turned sentiment more bearish.
Oil is one of Canada’s major exports.
“Volatility (in the currency) should be subdued until Friday when we have Canadian unemployment figures. But overall, markets are really focusing on the Bank of Canada rate decision on the 12th,” Richardson said.
At 4 p.m. EDT (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.2968 to the greenback, or 77.11 U.S. cents, down 0.2 percent.
The currency traded in a range of C$1.2930 to C$1.3015.
On Tuesday, the loonie touched its strongest since September at C$1.2912 as Bank of Canada Governor Stephen Poloz added more support to the view the central bank will hike next week for the first time since 2010.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries after U.S. data showed factory goods orders dropped 0.8 percent in May.
Earlier in the session, the 2-year yield reached its highest since September 2014 at 1.148 percent.
Canada's trade data for May is due on Thursday and the June employment report is due on Friday. ECONCA
Reporting by Fergal Smith; Editing by Jonathan Oatis and Lisa Shumaker
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