Canadian dollar posts biggest weekly drop since September

THE Canadian dollar was barely changed against its US counterpart on Friday (Mar 10), holding near a five-month low, as the failure of SVB Financial Group spooked investors, offsetting stronger-than-expected domestic jobs data.

The loonie was trading nearly unchanged 1.3830 to the greenback, or 72.31 US cents, after earlier touching its weakest since Oct 17 at 1.3861.

For the week, the currency was down 1.7 per cent, its biggest weekly decline since September 2022. “The loonie is not catching any breaks this week,” said Amo Sahota, director at Klarity FX in San Francisco.

“The narrowing of yield spreads was helping earlier in the session but the ongoing fallout on equities led by the SVB failure is just too much and high-beta FX has fallen,” he said.

High-beta currencies tend to be more volatile than the market as a whole.

Wall Street’s indexes fell as investors stressed out about the health of US banks broadly after regulators had to close SVB, a high-profile lender to the technology sector.

The Canadian economy beat expectations by adding 21,800 jobs in February, putting pressure on the Bank of Canada (BOC) to consider another rate hike after saying that it wanted to end its year-long tightening campaign.

On Wednesday, the BOC left its benchmark rate on hold at a 15-year high of 4.50 per cent.

Meanwhile, the US dollar fell against a basket of major currencies after the US unemployment report for February showed inflation pressures were easing.

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Dollar weakens after US jobs data suggests slower rate hike path

Canadian government bond yields were sharply lower across the curve, tracking the move in US Treasuries as investors sought out safe havens. The 10-year fell 15.9 basis points to 2.999 per cent, its lowest level since Feb 9. REUTERS