C$ hits weakest level since 2009; jobs data in view

Thu Jan 9, 2014 4:47pm EST
 
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By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar weakened to a more than four-year low against the greenback on Thursday and was at risk of falling further after the release of North American jobs data on Friday, reinforcing expectations the currency is in for a rocky 2014.

The recent selloff continued unabated as investors digested a round of monthly domestic housing data that showed Canadian building permits fell more than expected, as did housing starts, while home prices were unchanged.

At the same time, first-time claims for U.S. unemployment benefits declined more than expected last week, building expectations that the U.S. nonfarm payrolls report for December, due out on Friday, will show healthy job gains. Canada's employment report for December is also set for release on Friday.

"As we lead into tomorrow's dual employment releases, things can get particularly interesting as there has been building expectations for a strong U.S. nonfarm, and that would drive U.S. dollar strength," said Camilla Sutton, chief currency strategist at Scotiabank.

"Currencies have a way of overshooting, so it could be fairly negative (tomorrow). The next real resistance level is C$1.09, so we've been very close to that today. All in all, a break of C$1.09 would be very significant."

Canada's currency has not been as weak as C$1.09 since October 2009. On Thursday, it hit a session low of C$1.0875, a level also not seen since October 2009.

The loonie ended Thursday's North American session at C$1.0852 to the greenback, or 92.15 U.S. cents, weaker than Wednesday's close of C$1.0804, or 92.56 U.S. cents.

The Canadian dollar has fallen for five straight sessions as bearish sentiment has grown. A dovish Bank of Canada and the gradual unwinding of the U.S. Federal Reserve's bond purchases are expected to continue to weigh on the currency.   Continued...