Canadian dollar adds to weekly gain as oil climbs

Canadian dollar adds to weekly gain as oil climbs

The Canadian dollar firmed against its U.S. 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 per cent. 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 per cent higher at 1.2677 to the greenback, or 78.88 U.S. 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 per cent as expectations rose of a bigger U.S. 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 per cent of its exports to the United States, including oil.

U.S. crude prices were up 1.8 per cent at $51.73 a barrel, supported by Saudi Arabia’s pledge to cut output, while the U.S. dollar gave up its earlier gains against a basket of major currencies as data showed U.S. 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 per cent.

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Published at Fri, 08 Jan 2021 15:07:05 +0000