The Canadian dollar fell on Thursday, offsetting the gains it had on the previous day, as investors worry about the Fed's policy outlook and data showing that Canada's trade balance is faltering towards a deficit.
Similarly, US stock futures fell, while dollar rose after reports indicated that the stronger-than-expected growth in private sector employment undermined optimism that the Fed would abandon its hawkish stance.
US and Canadian employment reports due out on Friday could provide further clues to the outlook for interest rates, especially since economists expect Canada to add 8,000 jobs in December. There is also a 60% chance that the Bank of Canada will raise rates by 25 basis points when it makes its next policy decision on January 25.
In terms of the trade balance, reports said that there was a CAD 41 million (USD 30.3 million) trade deficit in November, following a revised CAD 130 million surplus in October. The decline in energy contributed to the fall in exports, while imports also declined.
As for Treasury yields, they were higher across the curve, with the 10-year bond yields up by 4.4 basis points to 3.187%.
