Canadian dollar firms as jobs gain supports 'recovery story'

TORONTO: The Canadian dollar edged higher against its broadly stronger US counterpart on Friday as domestic jobs data added to evidence of economic recovery, with the currency clawing back some of its prior day's sharp decline.

The loonie was trading 0.2% higher at 1.3104 to the greenback, or 76.31 US cents. The currency, which on Tuesday notched a near eight-month high at 1.2990, traded in a range of 1.3077 to 1.3140.

For the week, the loonie was on track to dip 0.1% after posting on Thursday its biggest decline in over two months.

Canada added 245,800 jobs in August, most of them full-time, and the unemployment rate fell to 10.2% as the economy continued to reopen from coronavirus shutdowns, Statistics Canada said.

"Overall, a roughly as expected report that supports the recovery story but also highlights the long journey faced by the economy to return to pre-COVID levels of employment and production," said Ryan Brecht, a senior economist at Action Economics.

US data also showed jobs growth, as well as a sharp drop in the unemployment rate. The greenback gained ground against a basket of major currencies, adding to this week's rally.

Strategists are growing more bullish on prospects for the Canadian dollar as global economic activity rebounds from the coronavirus crisis, a Reuters poll showed.

The price of oil, one of Canada's major exports, was on course for its biggest weekly decline since June as weak demand figures added to concern over a slow recovery from the COVID-19 pandemic. US crude prices were down 0.5% at $41.15 a barrel.

Canadian government bond yields were higher across a steeper curve in sympathy with US Treasuries. The 10-year was up 2.5 basis points at 0.564%, after having hit on Thursday a three-week low intraday at 0.518%.