TORONTO: The Canadian dollar steadied against its broadly stronger US counterpart on Friday, with the currency maintaining a modest weekly advance after a bigger-than-expected domestic jobs gain tempered expectations for Bank of Canada interest rate cuts.
Canada’s economy added 90,400 jobs in April, five times the number that was forecast, and the unemployment rate unexpectedly held steady at 6.1%.
Money markets see a 44% chance of a Bank of Canada interest rate cut at its next policy announcement on June 5, down from nearly 60% before the data.
Investors also weighed readings from the University of Michigan’s survey of consumer sentiment which showed year-ahead inflation expectations rising from 3.2% to 3.5% in May, the highest level since November.
“We saw the Canadian dollar rally on a stronger jobs number but then pull back on a stronger US dollar after that Michigan inflation reading,” said Michael Goshko, senior market analyst at Convera Canada.
The loonie was trading nearly unchanged at 1.3675 to the US dollar, or 73.13 US cents, after trading in a range of 1.3636 to 1.3690. For the week, the currency was up 0.1%.
Buyers of the US dollar are emerging in the low 1.36s after that area acted as sustained resistance for the greenback in the five months through April, Goshko said.
The US dollar edged higher against a basket of other major currencies on Friday, while the price of oil, one of Canada’s major exports, was down 1.2% at $78.33 a barrel as investors grappled with conflicting demand signals out of the US and China.
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