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Canadian dollar gains 0.2% against the greenback

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Trade deficit narrows in October

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Price of oil decreases 0.4%

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Bond yields edge lower across the curve

By Fergal Smith

TORONTO, Dec 5 (Reuters) - The Canadian dollar

strengthened against its U.S. counterpart on Thursday as

investors took stock of recent gains for the American currency

ahead of employment data on both sides of the border that could

guide expectations for interest rate cuts.

The loonie was trading 0.2% higher at 1.4050 to the

U.S. dollar, or 71.17 U.S. cents, after trading in a range of

1.4011 to 1.4079. Still, it has weakened 4.5% since late

September.

"Ultimately, I think the driver in the move is a little bit

of profit-taking in the U.S. dollar," said Rahim Madhavji,

president at KnightsbridgeFX.com. "People are getting ahead of

what we're going to see tomorrow in (U.S.) non-farm payrolls."

The Canadian dollar is expected to recoup only a small

fraction of its recent losses over the coming year as the threat

of U.S. trade tariffs hampers the outlook for Canada's

export-dependent economy, a Reuters poll found.

The greenback fell on Thursday against a basket of major

currencies as initial claims for U.S. state unemployment

benefits rose and investors stuck with bets the Federal Reserve

would cut interest rates at a policy decision on Dec. 18.

Canada and the United States are due to release their

November employment reports on Friday.

Economists expect a Canadian jobs gain of 25,000, while U.S.

non-farm payrolls are forecast increasing by 200,000.

The Bank of Canada is expected to continue its easing cycle

at a policy decision next Wednesday.

Domestic data on Thursday showed that Canada's trade deficit

narrowed to C$924 million ($657.60 million) in October.

The price of oil, one of Canada's major exports, fell

0.4% to $68.25 a barrel even as OPEC+ delayed its planned output

increase by three months.

Canadian bond yields edged lower across the curve, with the

10-year down 1.4 basis points at 3.064%.