Canadian dollar suffers biggest drop in one year

The Canadian dollar suffered it sharpest drop in one year against its US counterpart on Friday after a pickup in US wage growth boosted the greenback, while multi-year highs for bond yields pressured global stock markets. At 4 pm EST (2100 GMT), the Canadian dollar was trading 1.3 percent lower at C$1.2426 to the greenback, or 80.48 US cents, its biggest drop since January 2017.
"The Canadian dollar is getting hit from all sides today," said Adam Button, currency analyst at ForexLive in Montreal. "Equities are tumbling, commodities are softer and the US dollar is jumping due to an outstanding employment report." US job growth surged in January and wages posted their largest annual gain in more than 8-1/2 years. The data helped push the US dollar higher against a basket of major currencies as expectations rose that the Federal Reserve will raise interest rates three times this year.
All three major US stock indexes tumbled, pressured by prospects of higher inflattion and climbing bond yields "The Canadian dollar needs a strong global economy to flourish and stocks are having second thoughts," Button said. The currency's strongest level of the session was C$1.2256, while it touched its weakest since January 23 at C$1.2438. For the week, the loonie fell 0.9 percent.
US crude oil futures settled 0.5 percent lower at $65.45 a barrel. Oil is one of Canada's major exports. Speculators raised bullish bets on the Canadian dollar for the fourth straight week, data from the US Commodity Futures Trading Commission and Reuters calculations showed. As of Tuesday, net long positions had risen to 33,465 contracts from 22,557 a week earlier. On Wednesday, the loonie touched its strongest level in four months at C$1.2250. Canadian job growth in 2017 was revised slightly higher, data from Statistics Canada showed, confirming a stellar year for the country's labor market.
Canadian government bond prices were mixed across the yield curve. The 10-year rose 3 Canadian cents to yield 2.361 percent. Its yield touched its highest intraday level since May 2014 at 2.392 percent. The gap between Canada's 10-year yield and its US equivalent widened by 7.4 basis points to a spread of -48.3 basis points, its widest since December 20.