Canadian $ ekes out modest gains

The Canadian dollar eked out a modest gain against a rallying US dollar on Friday after domestic employment figures showed the economy unexpectedly created jobs in March and as crude prices edged higher. Economists had expected the employment level to remain unchanged in March, but data showed 28,700 new jobs. However, the gains came from 56,800 new part-time positions that offset the loss of 28,200 full-time posts. Unemployment remained steady at 6.8 percent.
"We've had a broad move in the US dollar, where most currencies have lost substantial ground today. But for Canada, it's been a different story," said Camilla Sutton, chief currency strategist at Scotiabank.
The Canadian dollar, which was outperforming nearly all of its major currency counterparts, finished at C$1.2580 to the greenback, or 79.49 US cents. This was sharply higher than prior to the data, and firmer than Thursday's Bank of Canada close at C$1.2592, or 79.42 US cents.
The currency traded in a wide range during the session, from as low as C$1.2667 to a high of C$1.2572. It weakened nearly 0.7 percent for the week.
The loonie also strengthened as crude prices rose on easing concerns that a nuclear deal with Iran could result in a fresh glut of Iranian oil into an already plentiful market. Canada is a major oil exporter and the currency has been sensitive to the commodity's price moves.
"We've got two positive factors for the Canadian dollar that have been enough to offset the broader US dollar strengthening moves that we've seen," said Sutton.
A stronger greenback will remain a key driver going forward, however. A slew of US data is expected next week, and domestically, markets are anticipating the Bank of Canada's next policy statement and monetary policy report, due on Wednesday.
Friday's jobs data reinforced the market's view that another interest rate cut by the bank is presently unnecessary. Markets had been bracing for a miserable report, given Governor Stephen Poloz's comment that first quarter growth would be "atrocious."
"Do you need more insurance policy at this point in time?" said Stefane Marion, chief economist at National Bank Financial. "I don't think so."
Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 2.5 Canadian cents to yield 0.525 percent and the benchmark 10-year slipping 3 Canadian cents to yield 1.375 percent.
The Canada-US two-year bond spread was -3.5, while the 10-year spread was -57.8.