Canadian dollar falls 0.2% against the greenback
For the week, the loonie loses 0.7%
Canada sheds 65,500 jobs in August
Bond yields drop across the curve
TORONTO, Sept 5 (Reuters) –
The Canadian dollar weakened against its U.S. counterpart on Friday and posted steeper losses against all the other Group of 10 currencies, as a surprise decline in Canadian employment raised expectations that the Bank of Canada would resume its easing campaign.
The loonie was trading 0.2% lower at 1.3840 per U.S. dollar, or 72.25 U.S. cents, after touching its weakest intraday level since August 27 at 1.3854. For the week, the currency was down 0.7%.
“After last week’s GDP disappointment, a weak Canadian employment report today is serving to keep the CAD tone very defensive and spot trading well above its estimated fair value,” Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note, estimating the currency’s fair value to be at 1.3643.
Canada’s economy shed 65,500 jobs in August, badly missing forecasts of a 10,000 increase, and the unemployment rate rose to 7.1%. That was the highest level of unemployment since May 2016 outside of the pandemic.
Investors see a 90% chance the BoC cuts interest rates at a policy decision on September 17, up from 75% before the data. The central bank last eased its benchmark rate in March, lowering it to 2.75%.
U.S. jobs data also disappointed, which cemented expectations for a Federal Reserve interest rate cut this month and led to the U.S. dollar falling sharply against a basket of major currencies.
was another headwind for the loonie, settling 2.5% lower at $61.87 a barrel as expectations grew of higher supply. Oil is one of Canada’s major exports. Canadian bond yields fell across the curve. The 10-year was down 7.2 basis points at 3.275%, after earlier touching its lowest level since June 24 at 3.253%. (Reporting by Fergal Smith; Editing by Alistair Bell and Marguerita Choy)
