The Canadian dollar fell to a one-week low against its U.S. counterpart on Friday as domestic data showing the economy shed more jobs than expected in January offset a seven-year high for oil prices.
The Canadian economy lost 200,100 jobs in January, compared to forecasts for a decline of 117,500, as many jurisdictions implemented restrictions to fight the Omicron variant of the coronavirus.
“There is no denying that today’s data is difficult for CAD bulls to swallow,” said Simon Harvey, head of FX analysis for Monex Europe and Monex Canada.
“In our view, this doesn’t vindicate the BoC’s decision last month to hold rates, as most of these job losses will be recouped in the next few months, but it does shift sentiment on the loonie in the interim.”
The Bank of Canada’s next policy announcement is on March 2, with money markets maintaining bets for a rate hike despite the weak jobs data.
In contrast, the U.S. economy created 467,000 jobs in January, far more than expected.
The Canadian dollar was trading 0.6% lower at 1.2750 to the greenback, or 78.43 U.S. cents, after touching its weakest level since last Friday at 1.2787.
For the week, the loonie was on track to gain 0.1%, helped by reduced volatility in global equity markets and a jump in the price of oil, one of Canada’s major exports, to its highest level since September 2014.
U.S. crude oil futures settled 2.3% higher at $92.31 a barrel as frigid U.S. weather and ongoing political turmoil among major world producers fueled worries about supply disruptions.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 5-year yield touched its highest level since March 2019 at 1.745% before dipping to 1.722%, up 6.8 basis points on the day.
(Reporting by Fergal Smith; Editing by Paul Simao and Andrea Ricci)
