TORONTO: The Canadian dollar rallied more than half a cent against its US counterpart and also strengthened against other major currencies on Monday as crude prices continued to trend higher.
Still, the Canadian dollar traded within recent ranges, as market participants awaited key employment data from both the United States and Canada, due on Friday.
Brent crude touched a 2015 high earlier in the session prior to retreating, while US crude ended just shy of $59 a barrel. The price of oil, a significant Canadian export, slipped as Saudi Arabia's plan to halt bombing in Yemen eased tensions over the security of Middle East supplies, but overall prices were still well off the multi-year lows hit in earlier this year.
"Generally speaking, if oil prices keep churning higher, than that should potentially offer a little bit more support for cad," said Greg Moore, senior currency strategist at RBC Capital Markets.
The Canadian dollar finished at 1.2092 to the greenback, or 82.70 US cents, stronger than the Bank of Canada's official close of C$1.2157, or 82.26 US cents on Friday. The loonie traded between C$1.2090 and C$1.2180 during the session.
Overall market activity was subdued due to the UK's May bank holiday. The market was expected to remain somewhat sidelined ahead of Friday's dual job reports for April.
"Given the overall themes we expect from both those reports, it appears as though ... the risk is to the up side for USD/CAD," said Moore, noting that RBC's forecasts for the US are even more optimistic than the bullish consensus of 225,000 new jobs created.
In Canada, economists are forecasting a soft report. The April figures will be the first major economic data point for the second quarter and strategists will be looking to see if the numbers support the Bank of Canada's view that the economy will begin rebounding this quarter after being hit hard by plunging crude prices in the first quarter.
Canadian government bond prices were mixed across the maturity curve, with the longer-term bonds falling. The two-year price was off half a Canadian cent to yield 0.712 percent and the benchmark 10-year slid 57 Canadian cents to yield 1.718 percent.
The Canada-US two-year bond spread was 10.9 basis points, while the 10-year spread was -42.4 basis points.
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