By Commodity News Service Canada
WINNIPEG, Oct. 3 – The Canadian dollar was sharply lower on Friday, dropping below the 89 cents US mark as traders reacted to disappointing Canadian trade data, analysts said.
Statistics Canada reported that merchandise exports out of Canada decreased 2.5 per cent in August, while imports rose 3.9 per cent, resulting in the trade balance with the world moving from a surplus of C$2.2 billion in July, to a deficit of C$610 million in August.
The Canadian dollar closed at US$0.8882 or US$1=C$1.1259 on Friday, which compares with Thursday’s North American settlement of US$0.8958 or US$1=C$1.1163.
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A surging US dollar, as employment data of the country was strong on Friday, was also behind the loonie’s softness. According to the US Labour Department, 248,000 new jobs were created in September, which was higher than expected. The unemployment rate also dropped to 5.9 per cent, the lowest in over five years.
A sharp decline in gold prices also weighed on the Canadian dollar, with weakness in crude oil contributing to the declines as well.
Canadian bonds ended lower on Friday, following the weakness in the US Treasury market after the release of better than expected US jobs data, brokers said.
The two-year bond yielded 1.144% late Friday, from 1.119% late Thursday. The 10-year bond yielded 2.156%, from 2.097%. Bond yields fall as their prices rise.
