TORONTO: Canada's dollar slipped against its US counterpart on Thursday, snapping four sessions of gains and staying in a tight range for most of the day on disappointing US jobless claims data.
US data on Thursday showed the number of Americans lining up for new jobless benefits fell slightly last week but remained above levels posted earlier this year, suggesting improvement in the labor market is stalling.
"Some people are seeing the initial jobless claims this morning as potential sign of negativity because there was not a big improvement," said Charles St-Arnaud, economist and currency strategist at Nomura Securities in New York.
US stocks, however, rose on a batch of strong earnings and upbeat housing data.
The Canadian dollar finished the session at C$0.9840 versus the US currency, or $1.0163, slightly softer from Wednesday's close at C$0.9835 against the US dollar, or $1.0168. Overnight the currency hit C$0.9806, its strongest level since Sept. 19.
The market focus will turn back to Bank of Canada Governor Mark Carney, who is scheduled to deliver a speech to an Ottawa business audience early on Friday morning.
In testimony before a Senate committee on Wednesday, Carney repeated that domestic economic conditions have improved to the point where it may become necessary that some of the considerable monetary policy stimulus in Canada may need to be withdrawn.
He dismissed the notion that the suggestion of coming interest rate hikes might hurt consumers, saying conditions are still very stimulative.
"Everything he has to say will drive markets right now because people are really trying to see when is the timing of the rate hike," said St-Arnaud.
Carney's testimony followed the US Federal Reserve's renewed pledge to hold interest rates near zero until late 2014 and Chairman Ben Bernanke's comments that the central bank would not hesitate to resume asset purchases if necessary.
"The interest rate picture is favoring the Canadian dollar at this point," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets.
The currency's gains were also capped by data that showed euro zone economic sentiment fell more than expected in April, driven by more pessimistic industry and services sectors, as the economy sinks into recession.
Canadian government bond prices were higher across the curve. Canada's two-year bond gained 7 Canadian cents to yield 1.395 percent, while the benchmark 10-year bond gained 32 Canadian cents to yield 2.067 percent.
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