Canadian dollar dips, pares decline ahead of jobs data

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar weakened to a near two-week low against its U.S. counterpart on Thursday before clawing back some of its losses, as oil prices fell and investors turned attention to the release of U.S. and Canadian employment data on Friday.

The loonie was trading 0.1% lower at 1.3725 to the greenback, or 72.86 U.S. cents, after touching its weakest level since Oct. 21 at 1.3808.

The price of oil, one of Canada's major exports, settled 2% lower at $88.17 a barrel as China stood by its zero-COVID policy and an increase in U.S. interest rates pushed up the U.S. dollar, raising fears of a global recession that would crimp fuel demand.

Markets have been rattled by the Federal Reserve's message that the peak for interest rates would likely be higher than previously expected.

Economic data showed that Canada's trade surplus with the world widened to C$1.1 billion ($827.4 million) in September as exports and imports both rose.

Canadian employment data for October, due on Friday, could provide further clues on the strength of the domestic economy.

Canadian government bond yields were higher across a flatter curve, tracking the move in U.S. Treasuries. The 2-year rose 11 basis points to 4.059%.

(Reporting by Fergal Smith; Editing by Jan Harvey, William Maclean)