TORONTO, Aug 7 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from an earlier 10-day high, as oil prices dipped and ahead of domestic employment data that could guide expectations for Bank of Canada interest rate cuts.
The loonie was trading 0.1% lower at 1.3753 per U.S. dollar, or 72.71 U.S. cents, after touching its strongest intraday level since July 28 at 1.3719.
"Tomorrow's employment release is the main event: we expect a sharp slowdown in job growth and a tick higher in the unemployment rate, which should keep the Bank of Canada cautious and cap further gains for the loonie," strategists at Monex Europe said in a note.
Canada's employment report for July, due on Friday, is expected to show a more moderate jobs gain of 13,500 after the economy added 83,100 jobs in June.
Last week, the BoC opened the door to resuming interest rate cuts if the upward price pressures from trade disruptions are contained. Investors see a near 30% chance the central bank eases next month.
"Everyone is trying to figure out the impact of tariffs, the outlook on the Canadian economy," said Rahim Madhavji, president at KnightsbridgeFX.com. "Oil prices are lower which is also a headwind for CAD."
The price of oil , one of Canada's major exports, fell 0.5% to $64.03 a barrel as expectations rose for a diplomatic end to the war in Ukraine.
Domestic data was upbeat. The seasonally adjusted Ivey Purchasing Managers Index (PMI) rose to 55.8 last month from 53.3 in June, posting its highest level since July 2024.
Still, Canadian bond yields edged lower across the curve. The 10-year was down nearly one basis point at 3.400%.
Reporting by Fergal Smith; Editing by Sandra Maler
