Canadian dollar rallies, boosted by domestic jobs strength

Fri Apr 7, 2017 10:44am EDT
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar strengthened on Friday to a four-day high against its U.S. counterpart, boosted by stronger-than-anticipated domestic employment data, while U.S. job gains undershot expectations.

Canada added 19,400 jobs in March, most of them full-time, Statistics Canada data showed. Analysts in a Reuters poll had forecast 5,000 new positions.

"It is still indicating that firms are confident to take on workers," said Paul Ferley, assistant chief economist at Royal Bank of Canada.

March marked the fourth month in a row that Canada has added jobs, the latest sign the economy is recovering from a prolonged slump caused by low oil prices.

Still, economists doubt that the Bank of Canada will drop its cautious tone next week when it releases its interest rate announcement and Monetary Policy Report.

"Policy is likely to remain unchanged, probably supported by ongoing concern about those external risks," Ferley said.

The implied probability of an interest rate hike this year increased from less than 20 percent before the data, but remained at less than a one-in-four chance, data from overnight index swaps showed. BOCWATCH

U.S. job growth slowed sharply in March amid continued layoffs in the retail sector. But a drop in the unemployment rate to a near 10-year low of 4.5 percent suggested the labor market was still tightening.   Continued...

File Photo: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015.   REUTERS/Mark Blinch/File Photo