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CANADA FX DEBT-Canadian dollar gains as greenback's rally fizzles

Fergal Smith
·2 min read
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(Adds analyst quotes and details throughout; updates prices) * Canadian dollar rises 0.2% against the greenback * Price of U.S. oil settles 1% lower * ADP data shows Canada shed 231,200 jobs in January * Canada's 10-year yield touches an 11-month high at 1.160% By Fergal Smith TORONTO, Feb 18 (Reuters) - The Canadian dollar strengthenedagainst its U.S. counterpart on Thursday as the greenbackbroadly declined, but the loonie stuck within its recent rangeas investors weighed the impact of higher U.S. bond yields oncurrency markets. The Canadian dollar was 0.2% higher at 1.2672 to thegreenback, or 78.91 U.S. cents, having traded in a range of1.2665 to 1.2730. Last month, it touched its highest in nearlythree years at 1.2586. "The Canadian dollar is rangebound, albeit with a modestfirming bias," Rahim Madhavji, president at KnightsbridgeFX.comsaid in a note. "The tug of war between the Fed and bond tradersis ongoing." U.S. long-term bond yields have scaled one-year highs thisweek in anticipation of an economic recovery, boosting the U.S.dollar against a basket of major currencies. But thegreenback gave back some of those gains on Thursday, pressuredby disappointing labor market data. Canadian yields have also moved higher, signaling theeconomy needs less support than it did in 2020, strategists say,as investors become more confident that a successful rollout ofCOVID-19 vaccines will eventually boost activity and inflation. The 10-year yield touched its highest sinceMarch last year at 1.160% before dipping to 1.148%, up 3.8 basispoints on the day. The price of oil, one of Canada's major exports, felldespite a sharp drop in U.S. crude inventories, as marketparticipants took profits following days of buying spurred by acold snap in Texas. U.S. crude prices settled 1% lower at$60.52 a barrel. Canada lost 231,200 jobs in January, the largest decreasesince May last year, a report from payroll services provider ADPshowed. December data was revised to show an increase of 338,200jobs rather than a decline of 28,800. Canada's retail sales report for December is due on Friday. (Reporting by Fergal Smith; Editing by Andrea Ricci and SamHolmes)