C$ rallies nearly a cent on robust domestic jobs report

Fri Nov 7, 2014 5:18pm EST
 
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar strengthened by nearly a cent against its U.S. counterpart on Friday, encouraged by a surprisingly robust domestic jobs report for October that hinted the Canadian economy may be healthier than thought.

Canada added 43,100 jobs in October, and the unemployment rate dropped to a nearly six-year low of 6.5 percent, Statistics Canada said. Analysts had expected a loss of 5,000 jobs on the heels of September's big 74,100 gain.

"The loonie is obviously shining well today on the positive jobs data. It strongly beat expectation pretty much all across the board," said Rahim Madhavji, president of KnightsbridgeFX.com.

The currency had been trading close to its weakest level in five years in recent sessions, partly due to a gloomier and more dovish tone adopted by Canada's central bank.

"The Bank of Canada has pretty much been gutting the loonie over the last couple of weeks, so I think it changes a little bit of the sentiment ... it reminds people that Canada perhaps isn't doing as badly," said Madhavji, who expected the currency to oscillate around the C$1.13 level against the greenback in the near term.

The Canadian dollar, which outperformed most of its currency peers on Friday, finished the session at C$1.1333 to the U.S. dollar, or 88.24 U.S. cents, sharply higher than Thursday's close of C$1.1426, or 87.52 U.S. cents.

"I still think (the Bank of Canada) is on the sidelines for a good while ... But this report certainly will tone down the dovish rhetoric coming out of the bank," said Sal Guatieri, senior economist at BMO Capital Markets.

The U.S. labor market also grew at a brisk pace in October, adding 214,000 new jobs, and the unemployment rate fell to a six-year low of 5.8 percent, underscoring the resilience of the world's largest economy in the face of slowing global demand.   Continued...

 
Canadian loonies, one dollar coins, are displayed in this posed photograph in Toronto, October 10, 2008.     REUTERS/Mark Blinch