Canada dollar strongest in a month after jobs data

Fri Dec 7, 2012 2:39pm EST
 

By Solarina Ho

TORONTO (Reuters) - The Canadian dollar strengthened against the U.S. dollar for the fourth straight session on Friday, jumping to a one-month high after both the Canadian and U.S. economies added more jobs than expected in November.

In Canada, government data showed 59,300 net new positions were created last month, the most number of jobs created in eight months. The jobless rate fell to 7.2 percent, the lowest since June, from 7.4 percent, said Statistics Canada.

"It's a solid report, from head to toe. At least upon first glance, I don't see any major warts in the data," said Doug Porter, deputy chief economist at BMO Capital Markets.

"There was a decline in construction and manufacturing jobs, but that's quibbling, given the fact that almost all the outsized gains were in private sector and full-time jobs."

Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that traders resumed placing small bets on a rate increase in late 2013 after the employment reports.

In the United States, nonfarm employment increased by 146,000 jobs last month, the Labor Department said, defying expectations of a sharp pull back related to superstorm Sandy. However, a drop in the jobless rate to a near-four year low as people gave up the search for work suggested the labor market was still tepid.

"It's pretty much a one direction bet today for risk assets, and in this case for the Canadian dollar I think you're probably going to have that general bid-tone sustained for the rest of the day," said Mazen Issa, a strategist at TD Securities.

At 9:34, the Canadian dollar was trading at C$0.9880 versus the greenback, or $1.0121. This was stronger than the C$0.9925, or $1.0076 it was trading at just before the jobs reports were released and firmer than Thursday's North American session finish of C$0.9911, or $1.0090.   Continued...