Canadian dollar ends week

09 Nov, 2008

The Canadian dollar ended higher on Friday and snapped a two-session losing skid after data showed the Canadian economy unexpectedly added jobs in October, although many of the jobs were special hires for the October 14 federal election.
Canadian bond prices reversed early losses after the jobs data and finished flat to higher across the curve as nagging concerns about a global recession convinced dealers to grab hold of more secure government debt ahead of the weekend. The Canadian dollar closed at C$1.1880 to the US dollar, or 84.18 US cents, up 0.3 percent from C$1.1916 to the US dollar, or 83.92 US cents, at Thursday's close. For the week, the Canadian dollar rose 1.4 percent.
Despite the election-related gains, the headline jobs number showed the economy added 9,500 jobs in October and was comfortably above expectations that Canada had shed 10,000 positions. And that was enough to prompt a rally in the Canadian dollar. Adding to the gains was a slide in the US dollar versus a number of major currencies after US data showed the economy shed many more jobs than expected, while the jobless rate moved to a 14-year high.
"The Canadian data was positive for the Canadian dollar and it does suggest that for right now at least the big job losses are not apparent," said Charmaine Buskas, senior economics strategist at TD Securities. "At the same time we did see a pretty big US dollar sell-off on the back of a bit weaker-than-expected payrolls number, so that combination created a little bit of support for the Canadian dollar."
Total job creation in Canada for October was a far cry from September, when 106,900 jobs were added, but it still followed scores of data this week from around the world that suggest a global recession could be more prolonged than had been thought.
Despite some impressive data on the Canadian economy, three of Canada's biggest banks forecast the Canadian economy will enter a mild recession next year. The next big figures due out of Canada will come from the housing report on Monday. It is expected to show housing starts dropped 8 percent in October to a seasonally adjusted annualised 200,000 units from 217,600 in September.

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