The Canadian dollar finished at a 3-1/2 month low versus the US currency on Friday as greenback-friendly remarks by US Federal Reserve Chairman Alan Greenspan stole the spotlight from weak Canadian and US jobs data. Canadian bond prices soared on the disappointing jobs reports, although one analyst said the weak numbers did not affect the near-term interest rate outlook significantly. The Canadian dollar finished at C$1.2486 to the US dollar, or 80.09 US cents, down from C$1.2414 to the US dollar, or 80.55 US cents, at Thursday's close.
The currency has held above 80 US cents since mid October, but briefly slipped below that level around midday after Greenspan said in London that market forces and tighter US fiscal policy should stabilise and may cut the US current account deficit.
This drove the greenback higher, victimising a Canadian currency that was also feeling the pinch of a somewhat gloomy first look at the country's economic performance in January. "Weakness in the Canadian dollar today is the by-product of weaker Canada payroll data, Ivey data, and combined with the strength of the US dollar - primarily against the euro - which comes on the heels of Greenspan's comments," said Jack Spitz, director of foreign exchange at National Bank of Canada.
Ottawa reported 5,700 jobs lost in January, the first decline since August, and a bit of a surprise for analysts who had expected a gain of 15,000 jobs.
Meanwhile the Ivey Purchasing Managers Index fell to 50.0 last month from 54.6 in December, missing market estimates of between 53 and 55.2.
Spitz said short-term technical indicators suggest the Canadian dollar will fall further, but the longer-term view was still muddled. "There's lot of factors at play here. There's event risk and there's economics, and there's G7 coming up as well," he said.
Greenspan's comments came as the two-day meeting of Group of Seven finance ministers and central bankers got under way in London.
The Canadian currency's gains last year came as the greenback was hurt by concerns over the swelling US current account deficit and suggestions that a further US dollar decline would be needed to reverse it.
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