C$ strengthens as ECB, BOJ rock markets

Thu Apr 4, 2013 10:33am EDT
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar seesawed against its U.S. counterpart on Thursday, first falling, then strengthening before nearly flattening against the U.S. currency amid a battery of external data and statements by central banks in Japan and Europe.

A busy day in currency markets saw the U.S. dollar gain ground against the yen after the Bank of Japan announced aggressive measures to ease monetary policy.

The euro hit 4-1/2-month lows against the greenback before storming back to strength as traders weighed comments by European Central Bank B President Mario Draghi, who affirmed his commitment to keeping the euro zone intact.<FRX/>

While Canada's currency was mostly sidelined by the global moves an unexpected rise in new claims for U.S. unemployment benefits pushed the Candian dollar weaker early in the session as economists worried the U.S. labor market was not out of the woods yet. The United States is the leading market for Canadian goods.

The number of Americans filing new claims for unemployment benefits rose to 385,000 last week, its highest level in four months, the third straight gain, and well above the 350,000 expected by economists surveyed by Reuters.

That, combined with weaker-than-expected ADP private-sector employment data on Wednesday has analysts ratcheting back expectations for the closely watched monthly U.S. payrolls and unemployment report due out on Friday. Canada's monthly job creation and unemployment rate data are also due out on Friday.

"I think on balance people are probably managing expectations a little bit lower, the consensus was around the 200,000 mark (of a net rise in U.S. payrolls), but people are starting to expect something lower," said Matt Perrier, a director of foreign exchange sales at BMO Capital Markets.

The Canadian dollar fell to a session low shortly after the U.S. jobless claims data was released, hitting C$1.0160 to the U.S. dollar, or 98.43 U.S. cents, before climbing steadily back, briefly strengthening above Wednesday's North American session close at C$1.0145 to the greenback, or 98.57 U.S. cents.   Continued...