CANADA FX DEBT-Canadian dollar gains in limited move ahead of jobs data

By Fergal Smith

TORONTO, Feb 3 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices rose and the greenback posted broad-based declines, but the loonie's move was limited ahead of jobs data due later this week.

The loonie CAD= was trading 0.3% higher at 1.3642 per U.S. dollar, or 73.30 U.S. cents, after trading in a range of 1.3637 to 1.3685. On Friday, the currency touched its strongest intraday level since October 2024 at 1.3479.

"The reality is that USD-CAD has depreciated a lot at the end of January for many reasons unrelated to Canada and that the market should see some consolidation at these levels," said Sarah Ying, head of foreign exchange strategy at CIBC Capital Markets.

"With the Bank of Canada firmly on hold, we are not convinced that this Friday’s LFS (Labour Force Survey) data will have much market impact," Ying said. "We think USD-CAD retests the 1.3800 handle before trading lower long-term. Our year-end target for USD-CAD remains at 1.34."

Canada's employment report for January, due on Friday, is expected to show the economy adding 7,000 jobs. Last week, the Bank of Canada left its benchmark interest rate unchanged at 2.25% and Governor Tiff Macklem said a high level of trade uncertainty made it difficult to predict when and how rates might next change.

The U.S. dollar .DXY weakened against a basket of major currencies, giving back some of its gains over the previous two days. The price of oil, one of Canada's major exports, was 1.5% higher at $63.06 a barrel on worries over supply.

Canadian bond yields moved higher across the curve as traders evaluated possible shifts in U.S. Federal Reserve policy under Kevin Warsh. The 10-year CA10YT=RR was up 2.1 basis points at 3.458%, after earlier touching its highest level since January 5 at 3.465%.