TORONTO, Dec 3 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rose and domestic data showed productivity rebounding in the third quarter.
The loonie was trading 0.2% higher at 1.3945 per U.S. dollar, or 71.71 U.S. cents, after trading in a range of 1.3939 to 1.3975.
Canadian labor productivity rose by 0.9% last quarter after declining 1% in the second quarter, helped by a sharp recovery in business output. It marked the sixth quarterly increase in eight quarters.
"While the rebound in productivity from the trade hit in Q2 is certainly encouraging, the big story here is the massive upward revisions to prior years," said Doug Porter, chief economist at BMO Capital Markets. "While no one is going to mistake Canada for a world leader in productivity growth, the backdrop is nowhere nearly as dismal on that front as first estimated."
Canada's jobs report for November, due on Friday, could offer additional clues on the state of the domestic economy. Economists have forecast that Canada's economy shed 5,000 jobs and that the unemployment rate edged up to 7% from 6.9% in October.
Still, the Bank of Canada has signaled that its easing campaign is on hold after the benchmark interest rate was lowered to a three-year low of 2.25% in October. Investors expect no change in rates at a policy decision next week.
The U.S. dollar extended recent losses against a basket of major currencies as traders raised bets on Federal Reserve rate cuts, while the price of oil was up 0.9% at $59.15 a barrel after Russia said talks with U.S. officials in Moscow failed to reach a compromise on a potential Ukraine peace deal. Oil is one of Canada's major exports.
Canadian bond yields eased across the curve, tracking moves in U.S. Treasuries. The 10-year was down 3 basis points at 3.221%, extending its pullback from a near three-month high at 3.277% during Tuesday's session.
Reporting by Fergal Smith; editing by Diane Craft
