Canadian dollar steadies as jobs gain offsets lower oil prices

TORONTO (Reuters) - The Canadian dollar was little changed against the greenback on Friday, as stronger-than-expected domestic jobs data helped support the currency after it was pressured this week by falling oil prices.

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

At 3:52 p.m. (2052 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3059 to the greenback, or 76.58 U.S. cents. The currency, which on Thursday hit its weakest intraday level in nearly two weeks at 1.3104, traded in a range of 1.3029 to 1.3075.

For the week, the loonie was down 0.5%, giving back some of the 5% gain it posted in 2019, when it was the top-performing G10 currency.

“The market still likes the Canadian dollar and doesn’t want to go into a weakening cycle for it,” said Amo Sahota, director at Klarity FX in San Francisco. “It was a darling at the end of last year and the market wants to bank on that at the beginning of this year.”

Speculators have more-than doubled their bullish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Jan. 7, net long positions had increased to 26,367 contracts from 11,913 in the prior week.

“It is one of the better positioned G10 currencies out there from the economics and the monetary policy side,” Sahota said.

Canada’s economy added 35,200 jobs in December, exceeding the gain of 25,000 that economists had forecast, while the unemployment rate fell to 5.6%, official data showed.

Chances that the Bank of Canada would cut interest rates by July fell to about 30% from nearly 40% before the release of the data, the overnight index swaps market showed. BOCWATCH

The central bank left its benchmark rate on hold at 1.75% in 2019 even as some of its counterparts, such as the Federal Reserve, eased.

U.S. crude oil futures CLc1 settled 0.9% lower at $59.04 a barrel, adding to their decline since Wednesday, when the threat of a wider conflict between the United States and Iran receded. Oil is one of Canada's major exports.

Canadian government bond prices were mixed across a flatter yield curve, with the two-year CA2YT=RR down 4 Canadian cents to yield 1.659% and the 10-year CA10YT=RR rising 11 Canadian cents to yield 1.592%.

Canada’s 2-year yield rose 2.9 basis points further above the yield on its U.S. counterpart to a spread of 9.1 basis points, after U.S. data showed a weaker-than-expected December jobs gain.

Reporting by Fergal Smith; Editing by Paul Simao and Grant McCool