TORONTO: Canadian dollar was marginally weaker against its US counterpart on Thursday, as investors mostly kept to the sidelines ahead of North American jobs data on Friday and with US markets closed for the Independence Day holiday.
Markets were primarily focused on overseas news, where the Bank of England and the European Central Bank both gave dovish outlooks. The central banks are trying to offset the impact of an expected stimulus withdrawal by the Federal Reserve later this year.
Just four days into his new job, BoE Governor Mark Carney surprised markets with a statement indicating the bank was in no rush to raise rates, while the ECB's Mario Draghi said it would keep interest rates at record lows for an extended period and may yet cut further.
The Canadian currency, which had strengthened to C$1.0472 per US dollar following the ECB comments, closed the North American session at C$1.0521 versus the US dollar, or 95.05 US cents in spotty holiday trading. This was slightly weaker than Wednesday's finish at C$1.0510, or 95.15 US cents. "We just seem to be sitting in that zone between support and resistance," said Don Mikolich, executive director, foreign exchange sales at CIBC World Markets.
The United States and Canada will both report monthly labor data tomorrow, with the US numbers expected to show steady improvement in the jobs market.
In Canada, economists are expecting a drop in jobs, according to a Reuters poll, following the surprising 95,000 jobs created in May.
"In Canada, there's expected to be a bit of give back from last month's pretty stupendous number," said Greg Moore, FX Strategist at TD Securities, which is forecasting a greater-than-consensus decline in jobs.
CIBC's Mikolich said the Canadian data would have to be fairly negative for the Canadian dollar to sell-off.
"Even if you see a small negative, you could argue, well, the average over the past few months is still overwhelmingly positive," he said.
Prices for Canadian government debt were higher across the maturity curve. The two-year bond climbed 2.5 Canadian cents to yield 1.181 percent, while the benchmark 10-year bond added 2 Canadian cents to yield 2.417 percent.
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