Canadian Dollar slips after Friday's jobs data surge, as oil pares gains

Saqib Iqbal Ahmed
·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Saqib Iqbal Ahmed

(Reuters) - The Canadian dollar slipped against its U.S. counterpart on Monday, giving up nearly all advances logged in the previous session, as oil prices pared the day's early gains.

At 4:01 p.m. EDT (2001 GMT), the Canadian dollar was trading 0.3% lower at 1.2557 to the greenback, or 79.64 U.S. cents.

The loonie had risen 0.3% on Friday after data showed Canada added far more jobs than expected in March, bringing employment to within 1.5% of pre-pandemic levels.

A rise in the price of oil, one of Canada's main exports, initially helped the loonie fend off deeper losses against its U.S. counterpart on Monday. But with oil barely clinging to the day's gains as the trading session progressed, the Canadian currency came under pressure.

Investors' expectation for a continued rise in U.S. Treasury yields has been supportive of the greenback, helping keep the Canadian dollar from breaking above the three-year high of $1.2361 touched in mid-March.

"While we expect some of the jump in jobs to be unwound this month as a result of Ontario’s lockdown moves, the trend in jobs and progress on access to vaccines should provide policy makers with enough confidence in the outlook to at least signal a move towards tapering asset purchases at the April 21st policy decision," Shaun Osborne, chief currency strategist at Scotiabank, said in a note.

"We look for the Canadian dollar to remain better supported on dips and to make a bit more progress in the short run back towards a $1.24 handle," Osborne said.

Canadian government bond yields were mixed across the curve, with the 10-year trading at 1.517%, not far from its close on Friday at 1.5%, while the 2-year traded at 0.247%, down from Friday's 0.254%.

(Reporting by Saqib Iqbal Ahmed; Editing by Jonathan Oatis and Peter Cooney)