Canadian Dollar Ekes Out Rare Gains Versus Greenback
The Canadian dollar rose unexpectedly versus the greenback, snapping a five-day losing streak that saw the currency fall to four-year lows.
The loonie edged up 43 pips against the US dollar, despite an underwhelming business report from the Bank of Canada. The business outlook for Canadian enterprises remained gloomy toward the end of 2013, as weak global demand and domestic uncertainty continue to pose a challenge. Slightly more than half of the 100 enterprises represented in the quarterly study said they expect to hire over the next 12 months. Canadian employers slashed 46,000 jobs in December. Job losses and a contracting labour force sent the unemployment rate back up to 7.2 percent, official data from Statistics Canada showed.
The USDCAD pair was trading at 1.0861 in the late hours of the North American session, having fallen through the initial support at 1.0866. The pair soared to 1.0932 last week amid signs of deepening US recovery. The greenback could backtrack further ahead of the January FOMC policy meetings should market participants anticipate no changes to the Fed’s stimulus program. The US economy added a mere 74,000 payrolls last month, which could prompt the Federal Reserve to put off another bond taper until March.
The outlook on the Canadian dollar is expected to dim further. Canadian manufacturers will likely welcome the weaker exchange rate, as this could help boost Canada’s fledgling export market. Canadian Finance Minister Jim Flaherty acknowledged that fact last week, as the market’s attention shifted to interest rates. The BOC has reiterated that interest rates would remain on hold until the nation’s economic data improves.
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