Canadian dollar flat after U.S. data; ends week higher

Fri Feb 1, 2013 4:45pm EST
 
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar was little changed on Friday, but ended the week stronger versus its U.S. counterpart after U.S. jobs and manufacturing data pointed to steady recovery in Canada's main trading partner.

The Canadian currency gained 0.9 percent for the week. It ended January down more than half a percent after the Bank of Canada said last week that interest rate hikes were less imminent. That news pushed it to less than equal value with the greenback for the first time since November.

The less hawkish stance, and any variation on it, is likely remain a central factor in the Canadian currency's future amid a global backdrop of activist monetary policy.

"The Canadian dollar is on its own at the moment because of the Bank of Canada and its change of policy. Everyone is looking at what each individual central bank is willing to do to affect the currency," said Darren Richardson, a corporate dealer at CanadianForex.

U.S. nonfarm payrolls grew modestly in January but gains in the prior two months were bigger than initially reported, supporting views the economy of Canada's main trading partner was on track for a sluggish recovery despite a surprise contraction in output in the final three months of 2012.

"The only surprise was that there was a large revision higher, so I would suspect the move in dollar/Canada has been on that revision higher for the December and November period," said Camilla Sutton, chief currency strategist at Scotiabank.

Separate reports on Friday showed U.S. factory activity hit a nine-month high in January as new orders rebounded, while car and truck sales surged and consumer confidence perked.

Sutton described the jobs report as "mildly positive" for the Canadian dollar, but said the impact was modest because the data was unlikely to shift policy at the U.S. Federal Reserve, which has tied its monetary stance to labor market improvement.   Continued...