The Canadian dollar weakened against the greenback on Friday after data showed the domestic economy unexpectedly shed jobs last month, adding to evidence of a sluggish labour market in Canada. The pressure on the loonie was mitigated by a separate report that showed jobs growth south of the border was weaker than expected, which put broad pressure on the US dollar.
But Canada fared worse, with a loss of 11,000 jobs in August, thwarting economists' forecasts for a gain of 10,000. Trading in the loonie was initially choppy before the currency was ultimately pulled lower. "Both jobs reports were pretty dismal but the Canadian report definitely trumped the US report on a relative basis," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "Losing jobs on a month-over-month basis and still having the full-time jobs be sluggish is definitely a negative for the Canadian economy."
The Canadian dollar ended the North American session at C$1.0881 to the greenback, or 91.90 US cents, weaker than Thursday's close of C$1.0874, or 91.96 US cents. Economists have been optimistic that an acceleration in the US economic recovery would ultimately bode well for Canada, whose largest trading partner is the United States. A slowdown in US jobs growth also hurts Canada's prospects in the long run. "The Canadian economy needs a stronger US economy at this point, so the US jobs report is bad news for the Canadian dollar, too," said Doug Porter, chief economist at BMO Capital Markets in Toronto.
The Canadian dollar was little changed on a week that was characterised by some sizeable moves both up and down. Canadian government bond prices were mostly higher across the maturity curve, with the two-year up 2 Canadian cents to yield 1.115 percent and the benchmark 10-year up 7 Canadian cents to yield 2.116 percent.