The Canadian dollar rallied against the greenback on Thursday, rebounding from a seven-week low the day before, but it underperformed many other G10 currencies as oil prices tumbled ahead of the release of domestic jobs data on Friday.
At 4:34 p.m., the Canadian dollar was trading 0.5 per cent higher at 1.3093 to the greenback, or 76.38 U.S. cents. On Wednesday, the loonie touched 1.3170, its weakest in more than seven weeks.
Still, other G10 currencies, with the exception of the safe-haven yen, posted bigger gains as risk appetite recovered at the start of the month and the U.S. dollar retreated sharply from a 16-month high hit on Wednesday.
“Good sentiment day, good recovery for the loonie, but not enough,” said Amo Sahota, a director at Klarity FX in San Francisco.
The market is waiting for the Canadian jobs report on Friday, Sahota said.
Canada’s employment report for October and September trade data are due on Friday.
Data on Thursday showed that Canada’s manufacturing sector expanded in October at the slowest pace in nearly two years as production and new business growth lost further momentum.
The IHS Markit Canada Manufacturing Purchasing Managers’ index (PMI) fell to a seasonally adjusted 53.9 last month, its lowest since January 2017, from 54.8 in September.
The price of oil, one of Canada’s major exports, was pressured by growing concerns that global demand is weakening at a time when output from the world’s major oil producers is surging. U.S. crude oil futures settled 2.5 per cent lower at $63.69 a barrel.
The loonie will rally over coming months on a recovery in demand for riskier assets and as a solid domestic economy supports more interest rate hikes from a hawkish central bank, according to a Reuters poll.
On Wednesday, Bank of Canada Governor Stephen Poloz repeated his message that interest rates would need to keep rising to meet the central bank’s inflation target.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 2.5 cents to yield 2.326 per cent and the 10-year climbed 10 cents to yield 2.481 per cent.