TORONTO: The Canadian dollar advanced against its US counterpart on Friday morning, buoyed by some rare positive data from the struggling US labor market and gaining tepid support from European Central Bank's much-anticipated move to launch a bond-buying program to try to draw a line under the region's debt crisis.
The US private sector added 201,000 jobs in August - more than economists had expected - while the number of Americans filing new claims for jobless benefits fell last week to the lowest level in a month.
Also, the ECB took action to lower the borrowing costs of struggling euro zone countries by launching a new bond-buying program that does not set a limit on how much sovereign debt it can buy.
Greg Moore, FX Strategist at TD Securities, said that despite the ECB move and a positive reaction on stock markets, the overall underlying theme in the foreign exchange market is still "risk-off" with currency traders disappointed by the lack of details in the ECB announcement.
Much of the ECB's announcement was priced in already following leaks and reports earlier, he said. The euro slid against the US dollar in volatile trading on Friday after initially rising on ECB hopes.
He noted also that the market was cautiously awaiting a German court ruling next week on the constitutionality of Germany participating in bond buying in Europe.
"That said, the C$ is looking a little bit stronger in the aftermath of this and that could be essentially focusing a little bit more on what might come next week from the Fed," Moore added. "I think from a bigger perspective though, the dollar/CAD is sitting in the same neutral range that it's been in since the middle of August."
At 9:30 a.m. (1330 GMT), Canada's dollar was trading at C$0.9854 against the greenback, or $1,9148, up from Wednesday's North American finish of C$0.9909 versus the US dollar, or $1.0092.
It had touched a session high minutes after the US labor data was released, briefly pared gains during the ECB news conference, and then strengthened further.
Royal Bank of Canada said the currency would likely trade between C$0.9850 and C$0.99 for the day as traders look ahead to Friday's monthly employment data from Canada and the United States as well as to a US Federal Reserve meeting next week.
Canadian government bonds were lower across the curve, with the two-year bond easing 8 Canadian cents to yield 1.152 percent. The benchmark 10-year bond price was down 55 Canadian cents, to yield 1.814.
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