(Updates prices and adds quotations and details from strategists throughout.)
* The Canadian dollar rises 0.9 percent against the US dollar.
* The loonie recovers from its lowest level since June 21 at 1.2449 * Canada reports a C$1.4 billion trade deficit in May * The 10-year Canadian yield falls about one basis point to 1.379 percent
Fergal Smith contributed to this article.
Reuters, TORONTO, July 2 – The Canadian currency rose against the US dollar on Friday, as the greenback lost some of its recent gains as investors awaited the Bank of Canada’s jobs report next week to see if it would support further easing of monetary policy.
The loonie was up 0.9 percent against the dollar, or 81.17 U.S. cents, at 1.2320, its highest level since May 6.
Earlier, the currency fell to 1.2449, its lowest level since June 21. It was down 0.2 percent for the week.
After the U.S. nonfarm payrolls report for June showed a significant job gain but some weak details, the dollar fell from a three-month high against a basket of key currencies. The dollar has risen this week on expectations of a positive report.
Marc Chandler, chief market strategist of Bannockburn Global Forex LLC, stated, “I think the (US) dollar was technically overextended.” “It was risky to buy the rumor and sell the truth.”
The June employment data for Canada is due on Friday.
Analysts expect job growth to pick up after two months of decreases, thanks to the relaxation of economic constraints imposed to combat the COVID-19 outbreak.
According to Chandler, this could result in the Bank of Canada lowering its bond purchases again at its July 14 interest rate announcement.
The Bank of Canada was the first major central bank to reduce pandemic assistance in April. The Bank of Canada’s more hawkish posture, combined with higher oil prices, will help the loonie appreciate in the coming year, although gains may fall short of the recent six-year high near 1.20, according to a Reuters poll.
In May, Canada’s trade imbalance was C$1.4 billion, as imports rose and exports declined. Separate data revealed that factory activity in Canada grew at its slowest rate in four months in June.
The 10-year bond yield in Canada fell about one basis point to 1.379 percent, the lowest level since March.
(Fergal Smith contributed reporting; Jonathan Oatis and Alistair Bell edited the piece.)/n
