Canadian Dollar Falls to 3 ½ Year Lows
The Canadian dollar fell to fresh three-and-a-half years lows, as the greenback continued to strengthen on the heels of stronger than forecasted US jobs data.
The loonie fell another 42 pips to 0.9248 US, extending its losing streak to three days. The currency was under pressure Monday after Finance Minister Jim Flaherty said the nation’s manufacturing industry may soon be supported by a weaker Canadian dollar. Since then, the loonie has depreciated more than 1.3 percent.
The US dollar enjoyed even broader support Wednesday after the ADP Institute said US employers added 238,000 private sector payrolls in December, exceeding estimates by more than 30,000. As job growth in the United States continues to accelerate the Federal Reserve will have greater leverage to continue tapering bond purchases, a move that would strengthen the greenback across the board.
The Fed decided to pare back asset purchases by $10 billion at its last rate meetings, as joblessness fell to 7 percent. Official employment data from the Labor Department this week is expected to show private payrolls exceeded 195,000 last month, according to various estimates on Wall Street.
Statistics Canada will present official employment data on Friday. The federal statistics agency may show Canadian employers added nearly 15,000 jobs in December, according to estimates. The unemployment rate is expected to remain unchanged at 6.9 percent.
Bank of Canada Governor Stephen Poloz has not ruled out an interest rate cut to help stimulate Canada’s economy and avoid deflation. While GDP growth in the third quarter was stronger than the BOC forecast, business investment is recovering at a slower pace than projected. Canada’s benchmark lending rate has been pegged at 1 percent since September 2010.
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