TORONTO: The Canadian dollar strengthened against the greenback on Thursday, powered by oil prices that surged to three-month highs.
The move in crude, a major Canadian export, came after a closely watched oil forecaster predicted prices would rise to $75 a barrel over the next two years. US crude oil futures settled up $1.62, or 3.39 percent, at $49.43 after touching $50.07.
The Canadian dollar ended at C$1.3017 to the greenback, or 76.82 US cents, stronger than the Bank of Canada's official close of C$1.3065, or 76.54 US cents on Wednesday.
The currency traded between C$1.2979 and C$1.3074 during the session.
"It's very much a reflection of what's going on in WTI (West Texas Intermediate crude), trading through $50 for the first time in a few months," said Jack Spitz, managing director of foreign exchange at National Bank Financial, adding that the move also inspired some offers in USD/CAD.
"Once again, as we saw yesterday and today, there's been some position squaring below C$1.30. With respect to the lead into Canada unemployment numbers, it's not surprising to see some of the short USD/CAD positions get squared as well."
Canadian labor data for September is due on Friday at 8:30 a.m. (1230 GMT). Economists polled by Reuters are expecting 10,000 jobs were created last month and an unemployment rate of 6.9 percent.
Spitz, who is expecting a weaker-than-consensus number, said the loonie was unlikely to break through the mid-C$1.29 level over the next day or so unless the data surprised on the upside and crude oil continued its rally.
The loonie was also aided by a softer US dollar, which eased after Federal Reserve meeting minutes for September underscored the growing view that the US central bank is unlikely to raise interest rates this year.
In economic data news, new home prices in Canada rose by 0.3 percent in August from July on continued strength in Ontario. Market analysts polled by Reuters had expected a 0.2 percent increase.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 4.5 Canadian cents to yield 0.554 percent, while the benchmark 10-year was down 46 Canadian cents to yield 1.506 percent.
The Canada-US two-year bond spread was -8.3 basis points, while the 10-year spread was -60.2 basis points.
Comments
Comments are closed for this article.