Canadian dollar makes gains ahead of jobs, trade data as U.S. dollar eases

TORONTO (Reuters) - The Canadian dollar strengthened against the greenback on Wednesday ahead of top tier domestic data this week, and as the U.S. dollar softened against a basket of major currencies.

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch/File Photo

Canada’s trade data for August is due on Thursday and the September employment report is scheduled for release on Friday, which could help guide market expectations on prospects of another interest rate hike by the Bank of Canada this month.

The central bank has raised rates twice since July. But the chances of another hike as soon as this month have dwindled to less than 20 percent from nearly 40 percent before Governor Stephen Poloz signaled last week that a third hike was not imminent, the overnight index swaps market indicated. BOCWATCH

At 4:00 p.m. the Canadian dollar CAD=D4 was trading at C$1.2477 to the greenback, or 80.15 U.S. cents, up 0.1 percent.

The currency traded in a range of C$1.2449 to C$1.25. On Tuesday, it touched a one-month low at C$1.2539.

Economic data will be the main currency driver in the coming weeks, said Rahim Madhavji, President at, adding that a dearth of economic news meant Wednesday’s moves were largely ebbs and flows in the market. “The devils are going to be in the details with GDP and jobs.”

Madhavji expected the currency to hold near current levels until the Federal Reserve or the Bank of Canada offers better clarity on their next move.

Speculation that U.S. President Donald Trump's choice for the next head of the Federal Reserve could be a less hawkish candidate than had previously been expected also weighed on the U.S. dollar .DXY.

Toronto home sales plunged in September from a year earlier and prices were down 15.5 percent from their April peak, but sales and prices inched up from August, suggesting housing in Canada’s largest city may be stabilizing, data showed.

The currency gained even as the price of oil, one of Canada’s major exports, dipped following an unexpected jump in U.S. crude exports and fanned worries about a global oversupply.

U.S. crude CLc1 prices settled at $49.98 a barrel, down 0.87 percent.

Canadian government bond prices were mixed across the yield curve. The two-year CA2YT=RR price inched down 1.5 Canadian cent to yield 1.532 percent and the 10-year CA10YT=RR gained lost 7 Canadian cents to yield 2.122 percent.

Reporting by Solarina Ho and Fergal Smith; Editing by Susan Thomas and Grant McCool