Canadian dollar falls 1.1% for the week as investors fret over global economic recovery

Toronto

THE Canadian dollar was little changed against the US dollar on Friday as investor hesitancy ahead of a Canadian election and broad-based gains for the greenback offset strong domestic jobs data, with the loonie giving back its earlier advance.

Canada added 90,200 jobs in August, while the unemployment rate dropped to 7.1 per cent, which could support another cut by the Bank of Canada of its quantitative easing stimulus.

"We saw the strength in the loonie. I think it exhausted itself after a strong labour market report," said Edward Moya, senior market analyst at Oanda in New York. "You have a little bit of hesitancy for placing positions ahead of the election but more importantly if we had a major move in the bond market, that could lead to a one-way trade in the (US) dollar."

US Treasury yields rose and the US dollar gained ground against a basket of major currencies after US economic data indicated high inflation could persist for some time.

Investors have been highly attuned to inflation data for signs of when the Federal Reserve may announce plans to begin tapering its bond-buying programme.

Canada's Prime Minister Justin Trudeau, facing potential defeat in the snap Sept 20 election, defended his decision to go to the polls early.

The Canadian dollar was trading nearly unchanged at 1.2668 to the greenback, or 78.94 US cents, after trading in a range of 1.2582 to 1.2682. For the week, the currency was down 1.1 per cent as investors worried that global economic recovery is losing momentum.

The price of oil , one of Canada's major exports, settled 2.3 per cent higher on growing signs of supply tightness in the United States as a result of Hurricane Ida.

Canadian government bond yields were higher across a steeper curve, with the 10-year up 6.1 basis points at 1.237 per cent. REUTERS