CANADA FX DEBT-Canadian dollar advances ahead of key domestic jobs report

* Canadian dollar gains 0.3% against the greenback

* Price of U.S. oil settles 0.3% higher

* 10-year yield eases about half a basis point

TORONTO, May 9 (Reuters) – The Canadian dollar
strengthened against its U.S. counterpart on Thursday as the
greenback posted broad-based declines and ahead of domestic jobs
data that could offer clues on the timing of Bank of Canada
interest rate cuts.

The loonie was trading 0.3% higher at 1.3677 per U.S.
dollar, or 73.12 U.S. cents.

“A big part of that (move) has been because of the broad
U.S. dollar selling we saw after the worse-than-expected initial
claims report,” said Erik Bregar, director of FX & precious
metals risk management at Silver Gold Bull.

“Bad news is a good thing for the markets broadly speaking.”

Wall Street rose and the U.S. dollar lost ground
against a basket of major currencies after economic data showed
the number of Americans filing new claims for unemployment
benefits increased more than expected last week.

Ebbing labor market momentum has put two interest rate cuts
from the Federal Reserve this year back on the table.

Canada’s employment report for April, due on Friday, is
expected to show the economy adding 18,000 jobs and the
unemployment rate increasing to 6.2%.

Disappointing data would solidify the chance of a Bank of
Canada interest rate cut, Bregar said.

Money markets see a roughly 60% chance the Canadian central
bank would begin a rate cutting campaign next month.

The Canadian financial system remains resilient, but the
continuing adjustment to higher rates and possible shocks
present key risks to stability, BoC Governor Tiff Macklem said.

The price of oil, one of Canada’s major exports,
settled 0.3% higher at $79.26 a barrel as data from China and
the U.S. signaled that demand in the world’s two biggest
crude-consuming nations could climb.

The Canadian 10-year yield was down about half a
basis point at 3.625%, as U.S. Treasury yields declined.
(Reporting by Fergal Smith; editing by Jonathan Oatis)