Canadian dollar hit by strong greenback

The Canadian dollar touched its weakest level against the US dollar in nearly two weeks on Friday, hurt by a slew of weak domestic economic data, while figures showing robust US job growth in February pushed the greenback to 11-1/2 year highs against a basket of currencies.
US employment accelerated in February and the jobless rate fell to a more than 6-1/2 year low of 5.5 percent, signals that could encourage the Federal Reserve to consider hiking interest rates as early as June. US nonfarm payrolls rose 295,000 last month after rising 239,000 in January. Economists polled by Reuters had expected a 240,000 rise.
"The Canadian dollar is in better shape than it's been in weeks against a broad basket of currencies, but the US dollar is a unstoppable machine at the moment," said Adam Button, currency analyst at ForexLive in Montreal, noting the "overwhelming appetite" for the US dollar. "The US is the only country hiking rates, and those rate hikes appear to be coming even sooner."
The Canadian dollar finished at C$1.2610 to the greenback, or 79.30 US cents, weaker than Thursday's close of C$1.2506, or 79.96 US cents. The currency weakened nearly 0.8 percent on the week. In Canada, the trade deficit hit C$2.45 billion ($1.94 billion) in January as Canada's large crude oil exports were hurt by low prices. The deficit was considerably wider than the C$1 billion shortfall analysts had expected and the second highest after the C$2.87 billion recorded in July 2012.
Meanwhile, labour productivity dropped by 0.1 percent in the fourth quarter of 2014, in contrast to forecasts for no change, and the value of Canadian building permits issued in January sank by 12.9 percent to C$6.13 billion. Market analysts had forecast a 4.3 percent drop.
The North American data underscored the likely divergence in the monetary policies of the two countries. Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets, said the Canadian figures were a "disaster" and big misses. "It puts an April rate cut right back on the table," he said. Canadian government bond prices were mostly lower across the maturity curve, with the two-year slipping 1 Canadian cent to yield 0.627 percent and the benchmark 10-year falling 84 Canadian cents to yield 1.613 percent.