Canadian dollar pressured by jobs loss, lower oil prices

Fri Feb 5, 2016 4:44pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar lost ground against its U.S. counterpart on Friday after weak Canadian jobs data underlined the economy's struggles to cope with an oil shock, while oil prices fell and U.S. wage inflation renewed bets on higher U.S. rates this year.

The sharp move weaker in the Canadian dollar followed strong appreciation earlier in the week, as the currency has broadly won back value since slumping to a 12-year low in mid-January.

Data showing Canada's economy shed jobs in January somewhat overshadowed encouraging improvement in its trade deficit, including strength in exports.

"A tremendous amount of bad news is priced into the Canadian dollar," said Adam Button, a currency analyst at ForexLive in Montreal. "Today's jobs report was a strike against the Canadian economy, but it's only one strike."

The Canadian dollar CAD=D4 ended the session trading at C$1.3908 to the greenback, or 71.90 U.S. cents, weaker than Thursday's official close of C$1.3745, or 72.75 U.S. cents.

It ended last week at C$1.4006, or 71.40 U.S. cents.

The currency's strongest level of the session was C$1.3710, while its weakest was C$1.3913. On Thursday, the currency touched its strongest since Dec. 11 at C$1.3640.

Speculators have trimmed bearish bets against the Canadian dollar, a week after they hit their highest in five months.   Continued...

An illustration picture shows Canadian banknotes of five Dollars in Reykjavik March 6, 2012.  REUTERS/Ingolfur Juliusson