C$ weakens after softer-than-expected jobs data

Fri May 10, 2013 9:57am EDT
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar dropped to its lowest against the U.S. dollar in almost two weeks after Canadian employment data showed fewer jobs gains than expected in April, erasing a week of strong gains by the currency.

The Canadian economy added 12,500 jobs last month, clawing back some of the 54,500 jobs lost in March, but the unemployment rate stayed at 7.2 percent, Statistics Canada reported. A Reuters survey of economists had forecast 15,000 new jobs.

"The report on balance was probably slightly softer than expected, so it's not a big surprise that we saw a bit of a sell-off (of the Canadian dollar), but it does not change our bigger view of the Canadian economy and what the Bank of Canada is going to do," said Robert Kavcic, senior economist at BMO Capital Markets.

"This is pretty consistent with an economy that has been growing below potential, and we're not looking for any move from the Bank of Canada until the second half of 2014, so this wouldn't change any of that."

The employment data - which showed strength in full-time job gains but losses in the private sector - sent the Canadian dollar tumbling lower, reversing what had been a steady appreciation against its U.S. counterpart in May.

At 9:43 a.m. (1343 GMT), the Canadian dollar traded at C$1.0127, or 98.75 U.S. cents, well off Thursday's North American session close at C$1.0075, or 99.26 U.S. cents. It briefly sank as low as C$1.0139, or 98.63 U.S. cents, its weakest level since April 29, before inching back.

The currency had climbed to its strongest level in nearly three months on Thursday, closing in on parity with the U.S. dollar after gaining some 2-1/2 cents since late April.

Over the longer term, the Canadian dollar is expected to weaken against the greenback in the year ahead, according to a Reuters poll published on Wednesday. Forecasters cited concern about the economy's slow rate of growth compared with that of the United States. <CAD/POLL>   Continued...