TORONTO: The Canadian dollar weakened to a fresh 14-month low against its US counterpart on Friday as US oil prices traded below $44 a barrel before paring losses, while the domestic economy added fewer jobs than expected in April.
Employers added 3,200 jobs last month, short of economists' forecasts for a gain of 10,000. The unemployment rate unexpectedly fell to 6.5 percent from 6.7 percent, the lowest since October 2008.
That followed a string of robust job gains over the past few months. But tame wage growth added to the reasons for the Bank of Canada to stay sidelined, said Paul Ferley, assistant chief economist at Royal Bank of Canada.
"It's not getting any indication of pressure on the inflation front and they are still concerned about potential trade protectionism emerging in the US, so I think they stay cautious," he said.
US President Donald Trump said last week he would terminate the North American Free Trade Agreement with Canada and Mexico if negotiations on the accord became "unserious."
Price of oil, one of Canada's major exports, fell to fresh five-month lows on concerns about a persistent glut despite assurances from Saudi Arabia that Russia was ready to join Organization of the Petroleum Exporting Countries in extending supply cuts.
US crude prices were down 0.29 percent at $45.39 a barrel.
At 9:15 a.m. ET (1315 GMT), the Canadian dollar was trading at C$1.3766 to the greenback, or 72.64 US cents, down 0.1 percent, according to Reuters data.
The currency's strongest level of the session was C$1.3748, while it touched its weakest since February 2016 at C$1.3793.
Modest losses for the loonie came as US jobs data showed signs of a tightening labor market that could seal the case for a Federal Reserve interest rate increase next month.
Canadian government bond prices were slightly lower across the yield curve in sympathy with US Treasuries. The two-year fell 1.5 Canadian cents to yield 0.691 percent and the 10-year declined 10 Canadian cents to yield 1.549 percent.
The 2-year yield fell 1.3 basis points further below its US equivalent to a spread of -63.9 basis points, its widest since April 2007.
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