* Canadian dollar gains against the greenback
* Touches its strongest level since June 3
* Canada’s services economy deteriorates in June
* Canadian bond yields rise across the curve
TORONTO, July 4 (Reuters) – The Canadian dollar
strengthened to a one-month high against its U.S. counterpart on
Thursday as the greenback posted broad-based declines, ahead of
domestic jobs data that could guide bets on further
interest-rate cuts by the Bank of Canada.
The loonie was trading 0.2% higher at 1.3609 to the
U.S. dollar, or 73.48 U.S. cents, its strongest level since June
3, despite soft business activity data.
Canada’s services economy moved back into contraction in
June as a decline in new business weighed on the sector’s
performance even as inflation pressures cooled, S&P Global
Canada services PMI data showed.
“Although today’s PMI numbers should add further
confirmation that the Canadian economy remains weak, it is
tomorrow’s jobs report that is key for the Bank of Canada,”
strategists at Monex Europe said in a note.
Economists expect the Canadian employment report, due on
Friday, to show the economy adding 22,500 jobs in June and the
unemployment rate rising to 6.3% from 6.2% in May.
Investors see a roughly 40% chance the Bank of Canada will
cut rates at its next policy meeting on July 24. Last month, the
BoC became the first G7 central bank to ease policy, lowering
its benchmark rate by 25 basis points to 4.75%.
The U.S. dollar lost ground against a basket of major
currencies after recent weak U.S. economic data raised prospects
the Federal Reserve would cut interest rates as soon as
September. U.S. markets were closed for the Independence Day
holiday.
The North American price of oil, one of Canada’s
major exports, was nearly unchanged at $83.91 a barrel, holding
near its highest level in more than one month.
Canadian bond yields rose across the curve. The 10-year was
up 3.9 basis points at 3.605%, moving closer to the one-month
high it touched on Tuesday at 3.659%.
(Reporting by Fergal Smith; Editing by Rod Nickel)
