Canadian dollar skids to one-week low after jobs, housing data miss

Fri Feb 8, 2013 10:03am EST
 

By Claire Sibonney

TORONTO (Reuters) - The Canadian dollar slid to its lowest level in more than a week on Friday after data showed Canada unexpectedly lost jobs in January and housing starts were much lower than forecast, spurring traders to reduce bets on an interest rate hike this year.

Canada's economy shed 21,900 jobs last month, but a drop in the number of people seeking work pushed the unemployment rate down to a four-year low of 7.0 percent.

Market analysts had forecast a gain of 5,000 positions after strong job gains in three of the previous four months.

"Clearly the 300,000 jobs creation last year was unsustainable and we have to brace ourselves for something more sustainable this year," said Stefane Mario, chief economist at National Bank Financial.

"You might have to reassess your growth expectations for the domestic economy this year, which means, in my view, that the Bank of Canada remains on the sideline through this year and no move before early 2014."

Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that after the data traders lowered their already small bets on a rate hike in late 2013.

At 9:25 a.m. (1425 GMT), the Canadian dollar stood at C$1.0026 versus the greenback, or 99.74 U.S. cents, almost half a cent weaker than Thursday's North American session close at C$0.9980, or $1.0020.

Following the jobs data, the currency hit a session low of C$1.0037 against the U.S. dollar, or 99.63 U.S. cents, its softest since January 30. It was around $1.0006, or 99.94 U.S. cents immediately before the employment report.   Continued...