Canadian dollar gives up weekly gain as US jobs data boost greenback
THE Canadian dollar weakened to a one-week low against its US counterpart on Friday (Feb 2) as stronger-than-expected US jobs data reduced prospects of the Federal Reserve cutting interest rates over the coming months.
The loonie was trading 0.6 per cent lower at 1.3460 to the greenback, or 74.29 US cents, after touching its weakest since last Friday at 1.3475. For the week, the currency was down 0.1 per cent.
“January’s jobs report out of the US has effectively killed the prospect of the Fed easing in March and has even cast doubt over a May cut, providing a boost to Treasury yields and the (US) dollar as a result,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
The greenback rallied against a basket of major currencies, adding to its gains since the start of the year. “The strong US data landed with long positioning in the Canadian dollar scanning as stretched, leaving the loonie vulnerable to a correction lower even as equities continue to trade in the green and data earlier in the week showed the economy outperforming expectations in Q4,” Harvey said.
Preliminary domestic data on Wednesday showed Canada’s economy likely expanding at an annualised rate of 1.2 per cent in the fourth quarter.
US stock index benchmark the S&P 500 climbed to a fresh record high but the price of oil, one of Canada’s major exports, was down 2 per cent at US$72.35 a barrel.
Canadian government bond yields rose across the curve, tracking moves in US Treasuries.
The 10-year was up 11.7 basis points at 3.38 per cent, after touching on Thursday its lowest intraday level in more than two weeks at 3.23 per cent. REUTERS
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