Loonie dives on weak jobs data, bonds surge

Fri Jan 11, 2008 5:20pm EST
 
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By John McCrank

TORONTO (Reuters) - The Canadian dollar was undercut by a much weaker than expected December jobs report on Friday, which knocked the currency back by more than a cent against the U.S. dollar.

Bond prices rose across the curve as investors bet there would be more bad news for Canada as a result of the economic slowdown in the United States,

The Canadian dollar closed at 98.07 U.S. cents, valuing a U.S. dollar at C$1.0197, down from 99.27 U.S. cents, or C$1.0074, at Thursday's close.

For the week, the Canadian dollar ended down 1.8 percent .

After three straight months of red-hot growth, the Canadian economy unexpectedly shed 18,700 jobs in December. The median forecast in a Reuters poll was for 15,000 jobs to be created.

The job losses came as the softening U.S. economy, along with the strong Canadian currency, battered manufacturers.

Finance Minister Jim Flaherty said on Friday that the factors leading to the job loses were still in place and further losses in the forestry and manufacturing sectors should be expected.

"We are going through a bit of a rough patch and we can anticipate that for months now we will see some job reductions in those sectors," Flaherty said.   Continued...