BLBG: Canada Dollar Erases Loss as Jobless Rate Falls to Four-Year Low
The Canadian dollar erased losses against its U.S. counterpart after the nation’s jobless rate unexpectedly declined to a four-year low, countering recent signs of slowing economic growth.
The currency strengthened versus most of its major peers as the nation added 39,800 jobs in December, lowering the unemployment rate to 7.1 percent from 7.2 percent the previous month, Statistics Canada said in Ottawa today. The U.S. unemployment rate held at 7.8 percent as employers added workers in December at about the same pace as the prior month.
“There’s plenty of room for the currency to move higher -- payroll numbers are always a good driver, said Jack Spitz, managing director of foreign exchange at National Bank, by phone from Toronto. “The market was absolutely looking for a weaker number for Canada so the move up was a major beat and has pushed the Canadian dollar higher.”
The Canadian dollar, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, rose 0.2 percent to 98.59 cents per U.S. dollar at 8:55 a.m. in Toronto, after falling as much as 0.5 percent. One Canadian dollar buys $1.0143.
Trading Patterns
The currency fell the most in almost two weeks against its U.S. counterpart yesterday after the Federal Reserve revealed it may end monetary stimulus as early as this year, allowing the currency to appreciate. The loonie rose Dec. 7 to the highest level since October versus its U.S. counterpart as employers added almost six times as many jobs as forecast in November.
Bank of Canada Governor Mark Carney is relying on consumption and business investment to lead an expansion during the next two years, and forecast growth will rebound after slowing to a 0.6 percent annualized pace in the third quarter. Carney reiterated Dec. 4 he may raise interest rates while the U.S. central bank has eased policy to reduce unemployment.
The country’s jobless rate has declined from 7.5 percent over the past year while employment increased by 1.8 percent or by 311,900.
“People will gravitate to wanting to own the second-tier reserve currency, commodity currency, the Canadian dollar, due to politics, due to strong economic growth, due to all the various reasons that we’ve had over the last couple years that Canada is trading at a premium to the U.S.” said Dean Popplewell, head analyst at the online currency-trading firm Oanda Corp. by phone from Toronto before the reports.
U.S. payrolls rose by 155,000 workers last month following a revised 161,000 advance in November that was more than initially estimated, Labor Department figures showed today in Washington. The median estimate of 82 economists surveyed by Bloomberg called for a increase of 152,000. The unemployment rate held at 7.8 percent after the November figure was revised up from a previously reported 7.7 percent.
The Canadian dollar has gained 1.7 percent in the past week versus nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes. The greenback has added 0.5 percent.
To contact the reporters on this story: Ari Altstedter in Toronto at aaltstedter@bloomberg.net; Cecile Gutscher in Toronto at cgutscher@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
