RTRS: Canadian dollar extends decline after U.S. jobless data
By Claire Sibonney
TORONTO (Reuters) - The Canadian dollar hit a session low against the U.S. dollar on Thursday after weak U.S. employment data, despite a report showing both Canada and U.S. trade deficits narrowed more than expected.
U.S. jobless claims jumped last week to their highest level since October, suggesting the labor market is still in a rut despite signs of improvement in the economy.
Signs of stronger growth in the United States, the destination for most of Canada's exports, had helped the Canadian dollar higher in recent weeks.
The currency dropped as far as C$0.9910 to it U.S. counterpart, or $1.0091, from around C$0.9888 right before the slew of reports were released.
Heading into the data, the currency was slightly weaker to begin with, but still held above parity against the greenback.
It remained in a tight trading range as investors were reluctant to take the currency much past a 31-month high hit in the previous session, which marked the 12th straight session of gains as it broke through a key resistance level.
"The Canadian dollar is not likely to do much. It looks like it's going to consolidate its recent gains," said Michael O'Neill, managing director at Knightsbridge Foreign Exchange.
O'Neill expects the currency to trade between C$0.9850 and C$0.9940 for the rest of the session.
"It's still basically the flavor of the year. As long as oil is staying bid and the U.S. dollar regains some footing, you should see some more selling of euro and buying of Canada," he said.
Brent oil futures climbed toward $100 a barrel on Thursday, piling pressure on OPEC to raise production to prevent high prices hurting the world economy.
At 9:01 a.m. (1401 GMT), the Canadian dollar was at C$0.9894 to the U.S. dollar, or $1.0107, slightly down from Wednesday's North American close at C$0.9869 to the U.S. dollar, or $1.0133.
Several analysts had forecast the currency could slide before climbing further, hurt by the reluctance of traders to test near-record highs.
Supporting the currency somewhat, a decline in imports helped Canada's trade deficit narrow unexpectedly in November to C$81 million from a revised C$1.48 billion in October.
The U.S. trade deficit for the month also shrunk more than forecast.
Canadian bond prices were mixed following the mixed batch of data, as Treasuries gained slightly.
The two-year bond was flat to yield 1.751 percent, while the 10-year bond dropped 9 Canadian cents to yield 3.270 percent.
