Jobs data knocks more than a cent off dollar

Fri Aug 6, 2010 5:00pm EDT
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By Ka Yan Ng

TORONTO (Reuters) - The Canadian dollar tumbled more than a penny to a one-week low against the U.S. currency on Friday, while government bonds climbed as weak Canadian and U.S. job reports for July suggested a softening economic recovery.

The currency fell after a Canadian employment report showed the economy posted its first monthly job losses of the year, then extended its decline after data showed U.S. employment fell for a second straight month.

The weak employment data helped knock the Canadian currency as low as C$1.0307 to the U.S. dollar, or 97.02 U.S. cents, its lowest level in a week.

The currency remained near its low as U.S. equities stayed soft. It closed at C$1.0279 to the U.S. dollar, or 97.29 U.S. cents, a sharp reversal from Thursday's finish at C$1.0166 to the U.S. dollar, or 98.37 U.S. cents. It hit a 13-week high against the greenback on Thursday.

"It's coming a bit back down to earth," said David Tulk, senior macro strategist at TD Securities. "It's tricky to figure out why exactly the Canadian dollar is being hurt as badly as it was, other than just returning some of the strength earlier in the week."

He said the domestic employment data had some decent details compared with the U.S. report.

Statistics Canada said the economy lost 9,300 jobs in July, after robust job creation in the first half of the year had recovered nearly all the jobs loss during the recession. The unemployment rate unexpectedly rose to 8 percent from 7.9 percent. Analysts in a Reuters poll had predicted an increase of 15,000 jobs after a strong gain of 93,200 in June.

By contrast, U.S. non-farm payrolls fell 131,000, against expectations for a 65,000 decline, while the unemployment rate was unchanged at 9.5 percent in July.   Continued...