TORONTO: The Canadian dollar weakened on Tuesday against the US dollar, which recouped its losses from Friday's dreary US jobs report as traders returned from the extended Easter weekend, but the Canadian currency remained an outperformer against many of its major counterparts.
The greenback's rally over the last few months stalled in recent weeks as a string of US economic data pointed to a softer first quarter. Signs of a slowing economy have tempered expectations of how soon the Federal Reserve will raise interest rates, with many forecasting sometime in the second half of the year.
"This is really more of a general US dollar strength story," said David Tulk, chief Canada macro strategist at TD Securities.
"It's just a bit more reflection on the payrolls data we had on Friday. As much as it disappointed, we don't want to read too, too much into a single data point."
The Canadian dollar finished the session at $1.2504 to the US dollar, or 79.97 US cents, softer than the Bank of Canada's official close of C$$1.2478, or 80.14 US cents.
The US dollar strength overshadowed a rally in crude prices, tempering the loonie's moves. Canada is a major crude exporter.
US crude prices, which fell as low as $51.17 a barrel earlier, settled at $53.98, while Brent crude settled at $59.10 as US forecast lower crude production growth and higher global demand.
Market focus will shift to minutes from the Federal Reserve's most recent policy meeting, due on Wednesday, for clues on the central bank's thinking.
Domestically, the calendar will remain quiet until Friday, when the Canadian employment figures for March will be released.
Canadian government bond prices were mixed across the maturity curve, with the two-year price down half a Canadian cent to yield 0.505 percent and the benchmark 10-year rising 2 Canadian cents to yield 1.345 percent.
The Canada-US two-year bond spread stood at -1.5, while the 10-year spread was -54.0.
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