The Canadian dollar was higher versus the greenback on Wednesday, supported by strong commodity prices in a quiet session marked by a lack of domestic data and with U.S. markets closed for the Independence Day holiday.
Bond prices were lower as investors looked ahead to Friday's Canadian jobs figures.
At 9:45 a.m. (1345 GMT), the Canadian dollar was at C$1.0592 to the U.S. dollar, or 94.41 U.S. cents, up from C$1.0605, or 94.30 U.S. cents, at Tuesday's close.
I think if anything, given that there's no economic data out, the market is going to be driven by deal flow more than anything else, said George Davis, chief technical strategist at RBC Capital Markets.
And the U.S. dollar has been under pressure since late last week, and I think to a certain extent, that has provided some support to the Canadian dollar as well.
Recent soft U.S. data and lingering concerns over the U.S. sub-prime mortgage fallout have been hurting the greenback.
Further weakness for the greenback comes from Europe, where the Bank of England is widely expected to hike interest rates on Thursday by 25 basis points to 5.75 percent, while the European Central Bank is seen keeping rates on hold but paving the way for a September increase.
The Canadian dollar is also getting support from firm commodity prices, such as gold and copper, and U.S. crude oil, which is above $71 a barrel.
The Canadian dollar generally benefits from higher oil and metals prices, as the country is a major commodities exporter.
Upcoming domestic data include building permits and the Ivey Purchasing Manager's Index on Thursday, with the main focus on Friday's June jobs report. Analysts expect, on average, a gain of 17,000 jobs with the unemployment rate unchanged at 6.1 percent.
BOND PRICES LOWER
Domestic bond prices were lower on Wednesday, as investors look forward to Friday's employment figures.
The Bank of Canada is widely expected to raise interest rates by 25 basis points on Tuesday, to 4.50 percent, and some believe another hike is in the cards for September.
However, a recent string of soft domestic data has caused some to question whether a second consecutive hike will happen, and are hoping Friday's employment figures provide some clues.
The two-year bond was down 1 Canadian cent to C$98.46 to yield 4.605 percent, while the 10-year bond dipped 9 Canadian cents to C$95.91 to yield 4.564 percent.
The yield spread between the two-year and 10-year bond was unchanged at -4.2 basis points.
The 30-year bond shed 10 Canadian cents to C$119.10 to yield 4.494 percent. In the United States, the 30-year treasury yielded 5.139 percent.
The three-month when-issued T-bill yielded 4.46 percent, unchanged from the previous close.