The Canadian dollar CADUSD strengthened against its U.S. counterpart on Thursday as oil prices rebounded, but gains for the currency were modest as data continued to signal a tight labour market in the United States.
The price of oil, one of Canada’s major exports, rallied after a sharp decline in the previous session, gaining support from Russian supply curbs.
U.S. crude prices rose 2.3 per cent to $75.68 a barrel, while the Canadian dollar was trading 0.2 per cent higher at 1.3525 to the U.S. currency, or 73.94 U.S. cents, after moving in a range of 1.3517 to 1.3556.
On Wednesday, the currency touched a near seven-week low at 1.3568 as investors bet that the Federal Reserve would raise interest rates to a higher endpoint than previously thought.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, data showed on Thursday. Investors worry that a tight labour market will make it more difficult for the Fed to bring inflation under control.
Canada’s labour market is also tight. Payroll employment rose by 91,400, or 0.5 per cent, in December from November, data from Statistics Canada showed.
Canadian government bond yields were mixed. The 10-year eased nearly half a basis point to 3.367 per cent after touching on Tuesday its highest level in more than three months at 3.447 per cent.
Canada is due to auction C$4-billion ($3.0-billion) of 10-year bonds, with the bidding deadline set for 12 p.m. ET (1700 GMT).