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Canadian Dollar Plunges as Employment Numbers Disappoint

H.S. Borji
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Canadian Dollar Plunges as Employment Numbers Disappoint

The Canadian dollar declined sharply against its US counterpart Friday as weak jobs data reminded investors Canada’s recovery still faces headwinds.

The loonie, as Canada’s currency is known, declined 0.61 percent to 0.9329 US, after trading at an intraday high of 0.9407 US prior to the jobs report.
The USDCAD pair advanced 0.65 percent to 1.0722.

In economic news, Canadian employment levels unexpectedly declined in June as gains in full-time work were offset by declines in part-time employment. Canada’s employment level declined 9,400 in June, after rising 25,800 the previous month, Statistics Canada reported today in Ottawa.

Economists forecast the economy to have added 20,000 jobs last month.

The unemployment rate nudged up 0.1 percentage points to 7.1 percent as more people searched for work. Still, participation rates were at 66.1 percent, unchanged from the previous month.

Canada has registered very little jobs growth since last summer. Compared to June 2013, employment increased 72,000 or 0.4 percent. That was the lowest year-on-year growth rate since February 2010 when the economy was recovering from the 2008-09 slowdown.

The figures weren’t all negative, as employers added 33,500 full-time jobs last month. Those gains were offset by a sharp decline in part-time employment, which fell by 43,000.

Youth employment plummeted in June, declining 43,600.

Today’s figures likely give the Bank of Canada all the justification it needs to maintain its dovish stance toward monetary policy. The central bank is scheduled to meet next week to discuss monetary policy and set the interest rate. Next week also sees the release of the BOC’s quarterly Monetary Policy Report.

The central bank is expected to hold interest rates at 1 percent, unchanged since September 2010.

The BOC has been actively “talking down” the Canadian dollar for several months, as policymakers look to exports to drive the next phase of Canada’s recovery.

The United States had no major data releases to report Friday. The Financial Management Service will release the June budget statement later this afternoon.
The US dollar index, a gauge of the greenback’s performance versus six commonly traded peers, advanced 0.11 percent to 80.21.

The Canadian dollar was weaker across the board Friday.

The EURCAD advanced 0.61 percent to 1.4581. In Eurozone data, Germany’s consumer price index for June was confirmed at 1 percent annually, the Federal Statistical Office reported today.

The CADJPY declined 0.7 percent to 94.49.

Statistics Canada will release inflation data next Friday. Consumer prices advanced at an annualized rate of 2.3 percent in May, a more than two-year high, StatsCan reported last month. May marked the second consecutive month consumer inflation was at or above the central bank’s target of 2 percent.

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