Canadian dollar firms as U.S. jobs report digested

Fri Jul 2, 2010 10:09am EDT
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TORONTO (Reuters) - The Canadian dollar rose slightly against the greenback on Friday morning as investors digested U.S. jobs data for June, which came in a little below what the market had expected but was not too far off the mark.

U.S. nonfarm payrolls dropped for the first time this year, down 125,000 jobs as temporary census employment came to an end. Analysts polled by Reuters had expected a decline of 110,000 jobs last month.

Private employment, considered a better measure of labor market health, rose by 83,000 in June, versus market expectations of a 112,000 gain.

The U.S. absorbs about three-quarters of all Canadian exports, and shortly after the jobs report came out, the Canadian dollar hit a session low of C$1.0661 to the U.S. dollar, or 93.80 U.S. cents, and then strengthened slightly.

"All in all, people are just trying to digest the weaker U.S. data we've seen over the last several weeks and what that implies for Canada," said Camilla Sutton, a currency strategist at Scotia Capital.

"We've had a tremendous shift in terms of the global growth outlook. We've seen weaker data from the U.S., weaker data from Canada, and, more importantly, we've seen a major shift in the stance of global policymakers away from supporting growth at all costs and toward fiscal responsibility."

At 9:15 a.m. (1315 GMT) the currency was at C$1.0630 to the U.S. dollar, or 94.07 U.S. cents, up from Wednesday's official North American market close of C$1.0646 to the U.S. dollar, or 93.93 U.S. cents. Thursday was the Canada Day holiday, and the Bank of Canada did not give an official closing number.

Outside of Canada on Thursday, the currency touched C$1.0675 to its American counterpart, or 93.68 U.S. cents, its weakest level since June 7. Less than three months ago, the U.S. and Canadian currencies were trading one for one.

"The broader story here is that the slowdown in global growth has been weighing on commodity prices and that's hurt the Canadian dollar," said Doug Porter, deputy chief economist at BMO Capital Markets.   Continued...

<p>Canadian Loonies, otherwise known as a one dollar coin, are displayed on top of an American currency in this posed photograph in Toronto, October 10, 2008. REUTERS/Mark Blinch</p>