The Canadian dollar fell to a nearly three-week low against its US counterpart on Friday after domestic data showed the economy shed jobs for a third straight month, cooling expectations for Bank of Canada interest rate hikes.
The loonie was trading 0.7 per cent lower at 1.4110 per U.S. dollar, or 70.87 US cents, after touching its weakest intraday level since October 19 at 1.4125.
For the week, the currency was on track to lose nearly 1 per cent, after three straight weeks of gains, as equity markets globally were buffeted by a selloff in AI stocks.
“The CAD has failed to deliver on the potential for its recent rebound to extend this week,” Shaun Osborne and Eric Theoret, FX strategists at Scotiabank, said in a note.
“Elevated equity-market volatility has overshadowed pretty much everything else, although the combination of weak Canadian and strong U.S. jobs data has given the CAD an added nudge lower into the weekend,” the strategists said.
Canadian employment fell 4,700 in October and the jobless rate rose to a six-month high of 6.7 per cent. Analysts had expected a 13,600 jobs gain.
Chances the Bank of Canada would tighten in December dipped to 35 per cent from 40 per cent, swap market data showed.
The Canadian central bank unveiled on Thursday a new five-year monetary policy framework with the federal finance ministry, keeping its inflation target unchanged at 2 per cent.
Also on Thursday, Prime Minister Mark Carney’s budget showed that he plans to use windfall oil revenue to boost Canada’s productivity and build infrastructure while keeping his previous fiscal goals intact.
US nonfarm payrolls increased more than expected in October, boosting the US dollar against a basket of major currencies.
U.S. crude futures added to their steep weekly decline, trading 0.1 per cent lower at US$90.40 a barrel, after the election losses of US President Donald Trump’s Republican Party raised hopes of a de-escalation in the US-Israeli war on Iran. Oil is one of Canada’s major exports.
The Canadian 2-year yield was down 3.3 basis points at 3.123 per cent, while it fell 6.8 basis points further below the equivalent US rate to a gap of about 139 basis points.
