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Canadian dollar hits more than one-month high

H.S. Borji
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Canadian dollar hits more than one-month high

The Canadian dollar advanced to a more than one-month high against its US counterpart Thursday, as Canada’s trade balance unexpectedly improved and US private sector employment increased at a slower rate than forecast.

The loonie, as the Canadian currency is known, climbed to an intraday high of 0.9233 US. It would later consolidate at 0.9215 US, advancing 0.34 percent. The loonie is trading at its highest level since July 30.

Canada’s currency has advanced 1.1 percent against the US dollar since August 25.
Underpinning the loonie’s gains was a bigger appetite for riskier currencies following news that Ukraine had reached a vague ceasefire agreement with Russia on Wednesday to halt the spread of violence in the eastern part of the country.

Meanwhile, the European Central Bank slashed interest rates further on Thursday and announced plans to purchase up to €500 billion in asset-backed securities. The ECB trimmed its target for the overnight rate to 0.05 percent from 0.15 percent, a new record low.

The Canadian dollar soared against the euro, as the EURCAD fell to an intraday low of 1.4088. The pair would subsequently consolidate at 1.4130, declining 1.31 percent.

In economic data, Canada’s trade surplus blossomed in July, as exports rose 1.4 percent and imports declined 0.3 percent. As a result, Canada’s trade surplus increased from $1.8 billion to $2.6 billion, Statistics Canada reported today in Ottawa. Economists forecast a narrowing of the surplus to $1.2 billion.

The Bank of Canada is relying on exports to drive the country’s recovery over the next two years. The BOC seemed pleased with the growth of exports in the second quarter, according to an official rate statement released on Wednesday.

“Canadian exports surged in the second quarter after a weak winter, supported notably by stronger U.S. investment spending and the past depreciation of the Canadian dollar,” read the official BOC press release.

However, the central bank said these efforts would need to be sustained in order to have any measurable impact on the broader economy.

“While an increasing number of export sectors appear to be turning the corner toward recovery, this pickup will need to be sustained before it will translate into higher business investment and hiring,” the BOC added.

In US data, private sector employment rose at a slower rate than forecast in August, although the overall picture remained positive.

US employers added 204,000 workers in August, following a gain of 212,000 the previous month, the ADP Institute reported today. Economists forecast an increase of 220,000.

Meanwhile, continuing jobless claims declined to 2.64 million in the week ended August 23, the lowest level since June 2007. Initial jobless claims – a narrower measure of unemployment – edged up slightly from 298,000 to 302,000 in the week ended August 30. The four-week average for initial claims rose 3,000 to 302,750, the Labor Department said.

Both Canada and the United States are scheduled to release official employment figures Friday. Canadian employers are forecast to have added 10,000 payrolls in August. In the United States, non-farm payrolls are forecast to have increased 230,000 last month.

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