Canadian dollar ends above parity after jobs data

Fri Feb 8, 2008 5:07pm EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar shot higher versus the U.S. dollar on Friday thanks to a stellar domestic jobs report, but it later backed off its session high, and suffered its first weekly loss in three weeks.

Canadian bond prices ended higher across the curve as early data related losses were considered overdone by some, while the bigger U.S. Treasury market offered a positive bid.

The Canadian dollar closed at US$1.0002, valuing a U.S. dollar at 99.98 U.S. cents, up from 98.93 U.S. cents, which values a U.S. dollar at C$1.0108, at Thursday's close.

Figures that showed the economy added four times more jobs than expected in January got the ball rolling for the Canadian dollar, which reached a session high of US$1.0053, valuing a U.S. dollar at 99.47 Canadian cents.

Heading into the session, the Canadian dollar was down about 1.3 percent on the week and looked set for more losses. But the surprising jobs data helped it rally and check out of the week down just 0.5 percent.

"It came out of nowhere," said David Watt, senior currency strategist at RBC Capital Markets. "It really looked like we were just going to have a piddly month of job gains ... but the Canadian economy is looking resilient."

According to Statistics Canada, the economy added 46,400 positions, while the unemployment rate returned to October's 33-year low of 5.8 percent from December's 6.0 percent.

But the Canadian dollar could not hang on to its gains as traders started to consider that the slowdown in the United States will eventually work its way into Canada.   Continued...