Canadian dollar rallies after surprising jump in Canadian jobs

Fri Jan 4, 2013 9:42am EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar gained sharply against its U.S. counterpart on Friday after Canada added a surprisingly robust 39,800 jobs in December, but the stronger move was hindered by a relatively subdued rate of hiring in the United States.

Canada defied expectations with the outsized gains, all of which came in full-time jobs and mostly in the private sector.

Meanwhile, the pace of hiring by U.S. employers eased slightly last month.

"The U.S. data are a slight disappointment," said Doug Porter, deputy chief economist at BMO Capital Markets. "If we had a combination of both a strong Canada and strong U.S., the Canadian dollar would be absolutely flying right now."

At 9:15 a.m. (1415 GMT) the Canadian dollar was trading at C$0.9858 to the greenback, or $1.0144, compared with C$0.9880, or $1.0121, at Thursday's North American close. It was at C$0.9910 just before the dual jobs data were released.

But despite the strong Canada jobs data, the third such outsized gain in four months, doubts remained over whether such growth was sustainable in the face of slower economic growth.

"As good as these numbers were, and have been over the last couple of months, there is still a sense that the levitation act on jobs can't continue for much longer," said Mark Chandler, head of Canadian fixed income and currency strategy at Royal Bank of Canada.

Canada has notched subdued inflation and gross domestic product data in recent months, complicating the central bank's stated aim of raising interest rates.   Continued...

A man holds the new Canadian 100 dollar bill made of polymer in Toronto November 14, 2011. REUTERS/Mark Blinch