Canadian dollar firms after solid trade data

Fri Mar 4, 2016 10:10am EST
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar strengthened slightly against its U.S. counterpart on Friday after solid trade data made a Bank of Canada rate cut less likely, even as a surge in U.S. jobs boosted Federal Reserve rate hike prospects.

Canadian exports rose for a third month, including increased trade with the U.S. that supports hoped for reorientation of Canada's economy toward the non-resource sector.

"This is the sort of data they (the Bank of Canada) want to see," said Andrew Kelvin, senior rates strategist at TD Securities. "This would make all else equal a rate cut less likely."

The implied probability of a rate cut this year was little changed since before the data, but has fallen to 42 percent from 80 percent last week when Finance Minister Bill Morneau said the government would stick to plans to stimulate the economy in a March 22 federal budget. BOCWATCH

The currency gyrated as the market also digested U.S. data.

U.S. payrolls surged in February, the clearest sign yet of labor market strength that could ease fears the economy may be heading into recession.

U.S. crude CLc1 prices were down 0.14 percent to $34.52 a barrel as gains this week were slightly pared. [O/R]

At 9:40 a.m. EST (1440 GMT), the Canadian dollar CAD=D4 was trading at C$1.3390 to the greenback, or 74.68 U.S. cents, stronger than Thursday's close of C$1.3396, or 74.65 U.S. cents.   Continued...

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