The Canadian dollar weakened to a five-week low against its U.S. counterpart on Thursday as the greenback broadly climbed and oil prices added to a sharp decline the previous day.
At 4:12 p.m. (2012 GMT), the Canadian dollar was trading 0.3 per cent lower at 1.3070 to the greenback, or 76.51 U.S. cents. The currency touched its weakest level since Sept. 11 at 1.3089.
The decline for the loonie was driven by strengthening of the U.S. dollar rather than “anything Canada-specific,” said Greg Anderson, global head of foreign exchange strategy for BMO Capital Markets in New York.
The U.S. dollar rose to a nine-day high against a basket of currencies as worries about Italy’s budget weighed on the euro.
Meanwhile, the price of oil was pressured by an escalating trade dispute between China and the United States and data showing ample supplies. U.S. crude oil futures settled 1.6 per cent lower at $68.65 a barrel.
Oil is one of Canada’s major exports, but crude’s impact on the loonie tends to weaken if it is not trading at levels needed to affect investment in Canada’s energy sector.
“Correlations between oil and USD-CAD have started to accelerate after being dormant and dead for most of the last 12 months,” Anderson said.
Canada added 28,800 jobs in September, helped by a pickup in hiring in the trade, education and healthcare industries, according to a report from ADP. The number of jobs added in August was revised higher to 42,700 from 13,600.
Canadian inflation data for September and the August retail sales report are due on Friday, which could help guide expectations for additional interest rate hikes from the Bank of Canada.
Economists expect the central bank to hike next week for the fifth time since July 2017, a Reuters poll showed.
Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 25 Canadian cents to yield 2.494 per cent.
The gap between Canada’s 10-year yield and its U.S. equivalent widened by 3 basis points to a spread of 68.5 basis points in favor of the U.S. bond.