The Canadian dollar hit a one-week low on Friday after the US jobs report for August came in far weaker than expected, reigniting fears about a global growth slowdown and sending investors to safe-haven assets. The US dollar also weakened against key currencies such as the yen and Swiss franc after news that US employers hired no new workers last month, against expectations for a 75,000 increase in payrolls.
That sent government bond prices higher and pushed stock markets into a global slump. Canada's dollar fell against all major currencies on concern about the country's link to the US economy. The United States is by far Canada's largest trading partner. The grim employment news will likely keep pressure on the US Federal Reserve to provide more monetary stimulus to aid the economy. The knock-on effect of that means the Bank of Canada will also likely keep rates lower for longer.
Higher interest rates tend to strengthen currencies by attracting international capital flows. The Canadian dollar closed at C$0.9842 to the US dollar, or $1.0161, down from Thursday's session close of C$0.9755 to the US dollar, or $1.0251. The Canadian currency slid as low as C$0.9854 against the US dollar, its weakest level since August 26.
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