Canadian dollar hits nearly three-week low on surprise jobs loss
TLT•The Canadian dollar fell 0.7% to 1.4110 per U.S. dollar after Canada lost 4,700 jobs in October, against expectations for a 13,600 gain. The unemployment rate rose to 6.7%, and market-implied chances of a Bank of Canada rate hike in December fell to 35% from 40%.
1. Jobs data weighs on loonie
The Canadian dollar hit a nearly three-week low on Friday after data showed the economy shed jobs for a third straight month, cooling expectations for Bank of Canada rate hikes. It traded 0.7% lower at 1.4110 per U.S. dollar after touching 1.4125, its weakest intraday level since October 19.
2. Rate expectations ease
Canadian employment fell by 4,700 in October, while the unemployment rate rose to a six-month high of 6.7%; analysts had expected a gain of 13,600 jobs. Market-implied chances of a December rate hike fell to 35% from 40%. The Canadian two-year yield was down 3.3 basis points at 3.123%, and its gap below the equivalent U.S. rate widened to about 139 basis points.
3. Other market pressures
The currency was on track to lose nearly 1% for the week, ending three straight weeks of gains. Strategists cited elevated equity-market volatility and weak Canadian jobs data alongside stronger U.S. employment figures. The Bank of Canada and federal finance ministry unveiled a five-year monetary policy framework on Thursday, keeping the inflation target at 2%.
