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The Canadian dollar weakened to a near two-week low against its U.S. counterpart on Thursday as the greenback broadly rose, but the loonie clawed back some of its decline ahead of the release of crucial employment data on Friday.

The December jobs report could help guide expectations for the Bank of Canada interest rate outlook. Data for November showed that Canada’s economy shed more than 70,000 positions, the most for any month since the global financial crisis.

“The Canadian jobs data has a well-earned reputation as a wild card,” said Adam Button, chief currency analyst at ForexLive. “Part of the volatility on Thursday was a reluctance by traders to take sides ahead of the number.”

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Bank of Canada Governor Stephen Poloz said on Thursday that potential downside risks from global trade friction seem to have eased, although much uncertainty remains around implications for Canada’s economy, which was hurt by temporary factors in recent months.

“There is a sense on Bay Street (Toronto’s financial district) that the Canadian economy is soft and that the Bank of Canada is more likely to cut rates than hike, yet nothing we have heard from the Bank of Canada has confirmed that,” Button said.

The U.S. dollar rose against a basket of major currencies as the United States and Iran moved away from an all-out conflict, prompting investors to take on more risk and shift focus to an upcoming U.S.-China trade deal and a U.S. non-farm payrolls report.

At 5 p.m., the Canadian dollar was trading 0.1 per cent lower at 1.3055 to the greenback, or 76.60 U.S. cents. The currency touched its weakest intraday level since Dec. 27 at 1.3104.

The loonie’s decline came as oil prices added to sharp losses in the previous session. U.S. crude oil futures settled 0.1 per cent lower at $59.56 a barrel.

In addition, domestic data showed that housing starts fell 3 per cent in December and the value of building permits fell by 2.4 per cent in November.

The Canadian dollar, last year’s top-performing G10 currency, will shift into a sideways trading pattern this year as the domestic economy softens and the recent boost from easing trade tensions fades, a Reuters poll showed.

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Canadian government bond prices were higher across a flatter yield curve on Thursday in sympathy with U.S. Treasuries. The 10-year rose 25 cents to yield 1.605 per cent.

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