Canadian dollar tumbles as domestic data disappoints, U.S. jobs jump

Fri Aug 5, 2016 4:47pm EDT
 
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar sunk against its surging U.S. counterpart on Friday as a slump in domestic jobs and a record-wide Canadian trade deficit contrasted with a robust U.S. jobs report.

The divergent data pushed the loonie, as Canada's currency is colloquially known, to its weakest level against the greenback in more than a week, reversing a short-term trend of moderate strength.

Canada's trade gap unexpectedly widened to a record deficit in June as export growth, key to the Bank of Canada's outlook, disappointed and imports of vehicles and parts jumped.

"For a small, open economy like ours that typically generates a lot of growth from the external economy, this is just not good news," said Shaun Osborne, chief currency strategist at Scotiabank.

In addition, the Canadian economy unexpectedly shed 31,200 jobs last month, pushing the unemployment rate up to 6.9 percent.

The Canadian dollar CAD=D4 ended the day trading at C$1.3164 to the greenback, or 75.96 U.S. cents, much weaker than Thursday's close of C$1.3022, or 76.79 U.S. cents.

It spiked to its weakest since July 27 at C$1.32 shortly after the economic data was released.

"It's a nightmare scenario for the Canadian dollar, essentially a robust U.S. report and a pair of ugly Canadian numbers. It doesn't get much worse than this," said Doug Porter, chief economist at BMO Capital Markets.   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