Canadian dollar extends weekly decline after US jobs data
THE Canadian dollar weakened to a two-week low against its US counterpart on Friday (Oct 4) as stronger-than-expected US jobs data bolstered the greenback, but the move was limited as oil added to its recent gains.
The loonie was trading 0.2 per cent lower at 1.3575 to the US dollar, or 73.66 US cents, after touching its weakest intraday level since Sep 19 at 1.3591. For the week, the currency was down 0.5 per cent.
“There had simply been lots of bad news priced into the USD, increasing the risks that a string of good news will kickstart a sizeable correction, and evidence for that is emerging,” said Jayati Bharadwaj, a global FX strategist at TD Securities.
The US dollar jumped to a seven-week high against a basket of major currencies after the jobs data led traders to reduce bets that the Federal Reserve will cut interest rates again by 50 basis points at its meeting in November.
The Canadian dollar “has been relatively shielded” against the US dollar’s move compared to other major currencies due to higher oil prices, Bharadwaj said.
The price of oil, one of Canada’s major exports, extended its sharp gains this week as investors feared a wider Middle East conflict could disrupt crude flows. US crude futures were up 1.5 per cent at US$74.80 a barrel.
Canadian economic activity rebounded in September after contracting in the prior month, Ivey Purchasing Managers Index data showed. The seasonally adjusted index rose to 53.1 from 48.2 in August.
Canadian bond yields rose, tracking moves in US Treasuries, and the curve moved back into a state of inversion after a two-week period of normalisation.
The two-year climbed 14.3 basis points to 3.204 per cent, its highest level since Sep 4, while it moved above the 10-year, which was trading 9.1 basis points higher at 3.187 per cent. REUTERS
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