Canadian dollar steadies after jobs data was not enough to spark uptrend

The Canadian dollar CADUSD steadied against its U.S. counterpart on Monday as investors turned attention to a key U.S. inflation report this week, with the currency unable to sustain the gains it made following recent domestic jobs data.

The loonie was trading unchanged at 1.3670 to the U.S. dollar, or 73.15 U.S. cents, after moving in a range of 1.3661 to 1.3689.

On Friday, the currency touched its strongest intraday level in one week at 1.3632, clawing back some of this year’s decline, after data showed Canada’s economy adding 90,400 jobs in April, five times the number that was forecast.

“Last Friday’s employment data for Canada was not enough to turn the trend,” said Howard Du, an FX Strategist at BofA Securities, adding that slower wage growth supports prospects for a Bank of Canada interest rate cut.

“We still think USD-CAD, this pair, is more driven by U.S. data than Canadian data,” Du said. “So if U.S. CPI this week surprises to the downside then that could lead to a more material USD-CAD selloff.”

The U.S. consumer price index report, due on Wednesday, is expected to show core inflation slowing to 3.6 per cent on an annual basis in April.

The price of oil, one of Canada’s major exports, settled 1.1 per cent higher at $79.12 a barrel, with investors looking out for potential oil supply disruptions due to wildfires in Western Canada.

Speculators have raised their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of May 7, net short positions had increased to 69,221 contracts from 63,201 in the prior week.

The Canadian 10-year yield was nearly unchanged at 3.693 per cent, steadying after it touched a one-week high during Friday’s session at 3.718 per cent.