TORONTO: The Canadian dollar strengthened against the greenback on Thursday as crude prices rebounded from the previous session's plunge and remained the currency's primary mover.
"The better oil prices have been the main reason for the Canadian dollar to appreciate," said Charles St-Arnaud, senior economist and strategist at Nomura Securities in London.
The market was also digesting data that showed Canada's trade deficit in December was significantly smaller than had been expected by analysts. Still, it nearly doubled to C$649 million, hurt by cheap prices for crude, a major Canadian export.
St-Arnaud noted a rebound in non-energy exports, a key area of focus for the Bank of Canada, but said exports declined during the fourth quarter in volume terms, while imports increased.
"Mathematically, it means you'll have a drag on growth coming from exports in Q4 and quite a substantial one," St-Arnaud said.
At 9:33 a.m. (1433 GMT), the Canadian dollar was at C$1.2496 to the greenback, or 80.03 US cents, stronger than Wednesday's close of C$1.2565, 79.59 US cents.
Investors will next focus on January employment reports from the United States and Canada on Friday. Forecasters predict 4,500 new jobs added in Canada.
Canadian government bond prices were mixed, but mostly weaker across the maturity curve, with the two-year down 4 Canadian cents to yield 0.415 percent and the benchmark 10-year off 42 Canadian cents to yield 1.310 percent.
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