By Commodity News Service Canada
WINNIPEG, March 6 – The Canadian dollar closed sharply lower against the US dollar on Friday, reacting to positive US employment data, analysts said.
The US Labour Department said 295,000 new jobs were created in the US last month, beating expectations of 245,000 new jobs. The positive data fuelled speculation that the US Federal Reserve will raise interest rates soon.
The Canadian dollar closed at US$0.7930 or US$1=C$1.2610 on Friday, which compares with Thursday’s North American settlement of US$0.7996 or US$1=C$1.2506.
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Soft Canadian trade data also contributed to the Canadian dollar’s decline. Statistics Canada said Canada’s merchandise trade deficit with the world rose to C$2.5 billion in January, from C$1.2 billion in December.
Further downward pressure came from weakness in crude oil values and ongoing worries about the negative effects it will have on Canada’s economy.
However, positive economic news from Europe was supportive. On Thursday, European Central Bank officials raised their economic growth outlooks. Data out of Germany also showed industrial production was up by 0.6 per cent in January, beating expectations of a 0.5 per cent jump.
Canadian bonds moved lower on Friday, reacting to the better than expected US employment data, according to brokers. Weakness in the US Treasury market was also bearish.
The two-year bond yielded 0.625% Friday, from 0.624% late Thursday. The 10-year bond yielded 1.609%, from 1.525%. Bond yields rise as their prices fall.
