Jobs data tugs Canadian dollar away from parity; bonds firm

Fri Apr 9, 2010 4:26pm EDT
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By Jennifer Kwan

TORONTO (Reuters) - The Canadian dollar ended on a weaker note on Friday, tumbling away from parity with the greenback after data showed softer jobs growth in March than expected.

The Canadian currency fell as low as C$1.0084 to the U.S. dollar, or 99.17 U.S. cents, as investors reacted to the jobs data, which eased pressure on the Bank of Canada to raise interest rates. Before release of the jobs data, it was trading close to one-for-one with the U.S. dollar.

Canada's economy added a net 17,900 jobs in March, following gains of 20,900 in February and 43,000 in January. The unemployment rate remained steady at 8.2 percent.

Expectations had been for an increase of 25,000 jobs and an unemployment rate of 8.2 percent.

"There was some talk on the Street that the job gains in March would be significantly higher than the 25,000 expected by the market. When it turned out we didn't get that level of job growth in March it more or less sucked the air out of the Canadian dollar," said Millan Mulraine, economics strategist at TD Securities.

"The Canadian dollar never fully recovered from that drop."

The currency finished the session at C$1.0040 to the U.S. dollar, or 99.60 U.S. cents, down from Thursday's close at C$1.0028 to the U.S. dollar, or 99.72 U.S. cents. It rose 0.4 percent on the week.

"It's softer than expected, but not soft numbers," Matthew Strauss, senior currency strategist at RBC Capital Markets, said of the employment report.   Continued...