TORONTO, June 5 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday, but the decline was less than for other Group of 10 currencies after data showed that the U.S. and Canadian economies added more jobs than expected last month.
The loonie was trading 0.1% lower at 1.3920 per U.S. dollar, or 71.84 U.S. cents, after moving in a range of 1.3868 to 1.3923.
For the week, the currency was down 0.9%, putting it on track for its biggest weekly decline since March. It touched on Thursday an eight-week low at 1.3925 after recent data showed the economy slipping into a technical recession.
"Labor market reports in both Canada and the U.S. came in strong for May, and the result was a very muted impact on the currency where two very large drivers clashed," said Sarah Ying, head of foreign exchange strategy at CIBC Capital Markets.
Canada's economy added 87,800 jobs and the unemployment rate fell to 6.6% in May, wiping out much of the job declines since the start of the year. Economists had forecast a jobs gain of 10,000 and the unemployment rate holding steady at 6.9%.
Investors were pricing in roughly 40 basis points of interest rate hikes by the Bank of Canada through the end of the year, up from 34 basis points before the data. A Reuters poll showed that economists expect no change in rates this year, including at a policy decision next Wednesday.
"Now that the key data release is over this month, we suspect that the market will revert to trading other macro themes in the coming sessions," Ying said, adding that U.S.-Iran negotiations, discussions around a continental trade pact review, and risk sentiment will likely be the main drivers of the currency.
Wall Street's major indexes fell as chipmakers lost steam following a sharp rally, while the U.S. dollar (.DXY)> jumped to a near two-month high against a basket of major currencies.
The price of oil, one of Canada's major exports, was trading 2% lower at $91.23 a barrel but was headed for a weekly gain.
Canadian bond yields moved higher across the curve, with the 10-year up 8 basis points at 3.517% after earlier touching its highest level since May 22 at 3.531%.
Reporting by Fergal Smith; Editing by Andrea Ricci
