Loonie steadies as investors eye potential oil output cut

TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Friday as oil prices soared for a second straight day, while grim U.S. jobs data added to evidence of the economic damage from the coronavirus pandemic.

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto, January 23, 2015. REUTERS/Mark Blinch/File Photo

At 3:36 p.m. (1936 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.4136 to the greenback, or 70.74 U.S. cents. The currency, which was down 1.2% for the week, traded in a range of 1.4095 to 1.4223.

The loonie’s steady showing came as the currency moved closer to completing a triangle formation on technical charts.

A breakout from the formation could be forthcoming after major oil producers decide whether or not to cut production, said Tony Valente, a senior FX dealer at AscendantFX.

Hopes that a production cut deal will be announced early next week helped drive the price of oil, one of Canada's major exports, sharply higher. U.S. crude oil futures CLc1 settled up 11.9%.

U.S. nonfarm payrolls plummeted by 701,000 in March, a much bigger-than-expected decline than had been expected. Canada sends about 75% of its exports to the United States.

Speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed. As of March 31, net short positions had fallen to 21,929 contracts from 29,245 in the prior week.

The Canadian dollar is expected to remain at depressed levels over the coming months, with analysts in a Reuters poll slashing their forecasts for the currency as the coronavirus pandemic potentially pushes Canada’s economy into a deep recession.

Ottawa is rolling out more than C$200 billion in support for the economy, including direct aid to Canadians, wage subsidies for businesses, loan programs and tax deferrals, while the Bank of Canada has slashed interest rates to nearly zero and launched a large-scale asset purchase program, quantitative easing, for the first time.

Canada’s biggest banks have received nearly half a million requests from homeowners to hold off mortgage payments as the economic fallout from the outbreak of COVID-19, the respiratory illness caused by the coronavirus, deepens, according to the Canadian Bankers’ Association.

Canadian government bond yields were mixed across the curve, with the 10-year CA10YT=RR rising 1 basis point to 0.710%.

Reporting by Fergal Smith; Editing by Nick Zieminski and Paul Simao