Canadian dollar adds to weekly gain as oil climbs

TORONTO: The Canadian dollar firmed against its US counterpart on Friday as oil prices moved higher, with the currency adding to this week's gains despite domestic data showing the first jobs decline since April.

Canada shed 63,000 jobs in December, a bigger decline than was expected, Statistics Canada data showed, amid more restrictions aimed at curbing a second wave of coronavirus infections.

"In the near term, the lockdowns will challenge the economy, likely spurring calls for more fiscal stimulus and keeping the BoC on an accommodative path," said Ryan Brecht, a senior economist at Action Economics.

The Bank of Canada has cut rates to a record low of 0.25%. In December, the central bank said it could lower interest rates further without going negative if the second wave leads to more scarring of the economy. Its next policy decision is due on Jan. 20.

The Canadian dollar was trading 0.1% higher at 1.2677 to the greenback, or 78.88 US cents. The currency traded in a range of 1.2658 to 1.2707.

For the week, the loonie was on track to gain 0.4% as expectations rose of a bigger US fiscal package and infrastructure spending under President-elect Joe Biden's administration. On Wednesday, it touched its strongest in nearly three years at 1.2626

Canada sends about 75% of its exports to the United States, including oil.

US crude prices were up 1.8% at $51.73 a barrel, supported by Saudi Arabia's pledge to cut output, while the US dollar gave up its earlier gains against a basket of major currencies as data showed US nonfarm payrolls decreased by 140,000 last month.

Canadian government bond yields were little changed across the curve, with the 10-year trading at 0.796%.