Canadian dollar undercut by soft commodities, risk sentiment

The Canadian dollar softened against a firmer greenback on Friday, paring earlier gains spurred by healthy domestic jobs data, as commodity prices unraveled and concerns about the global economy weighed. US crude fell 2.64 percent to settle below $100 a barrel as supply concerns eased on news that Saudi Arabia was offering more oil to Asian refiners.
Oil prices were further pressured by a broad-based flight to safety over concerns that the global economy is stalling, which helped support the US dollar. "It's general US dollar strength across the board and we've been lumped into that," said Shane Enright, executive director, foreign exchange sales at CIBC World Markets.
Investors also dumped the euro over a lack of clarity on financial assistance for debt-ridden Greece, giving extra fuel to the US currency. The stronger greenback put more pressure on commodities, which are generally priced in US dollars, helping send the Reuters-Jefferies CRB index - a basket of 19 commodities - down 1 percent.
Canada's economy relies heavily on resource exports and its currency is affected by swings in their prices. Gold fell almost 1 percent for its biggest one-day decline in a month, weighed down by the greenback, and copper dropped to its lowest level since late May after disappointing import data from China hurt investor sentiment.
The Canadian dollar ended the North American session at C$0.9783 to the US dollar, or $1.0222, down from Thursday's close at C$0.9731 to the US dollar, or $1.0276. Early in the session, the currency had firmed to C$0.9711 to the US dollar, or $1.0298 - its strongest level since June 1 - following a better than expected domestic employment report.
The unemployment rate fell to 7.4 percent in May from 7.6 percent as 22,300 jobs were added, marked by a solid shift toward full-time, private-sector employment. That was slightly better than the 20,000 jobs expected by analysts, who also forecast the unemployment rate would remain static. But the currency was unable to hold onto its gains as the data was not strong enough to influence monetary policy, said Michael Gregory, senior economist at BMO Capital Markets.