TORONTO: The Canadian dollar hit a four-year low against the greenback on Friday after data showed the country unexpectedly shed jobs last month, adding to concerns about the economy's sluggish performance.
The report sent the loonie through the psychologically important C$1.09 level that analysts had thought could provide support. The currency has fallen in every session this week as the US dollar appreciated nearly 3 percent against the Canadian dollar.
Canada's economy lost 45,900 jobs in December and the unemployment rate rose in a surprising setback. At the same time, labor market data south of the border also disappointed as US employers hired the fewest workers in almost three years.
"For the Canadian dollar, very weak employment data - just like the trade data did on Tuesday - it just highlights some of the biggest concerns for the Canadian dollar, which is the economy not recovering to the extent that many had hoped," said Camilla Sutton, chief currency strategist at Scotiabank in Toronto.
Analysts said the data will likely prompt the Bank of Canada to maintain a dovish stance. The central bank's policy shift late last year has dragged the loonie down as investors anticipate rates will stay low for longer.
"For the Bank of Canada, when you look at wages, decelerating down to 2 percent pretty much reaffirms the bias that the Bank has about the low inflation backdrop, so that dovish tone from the Bank of Canada should persist," said Mazen Issa, macro strategist at TD Securities in Toronto.
The Canadian dollar was at C$1.0923 to the greenback, or 91.55 US cents, weaker than Thursday's close of C$1.0852, or 92.15 US cents. The loonie was not far off its session low of C$1.0946, its lowest level since October 2009.
After the Canadian dollar suffered its worst year in 2013 since the financial crisis, investors have returned to 2014 expecting the currency to fall further out of favor.
The next level to watch for the US dollar-Canadian dollar pairing will be C$1.10, Sutton said.
"All in all, I think it's a story where US dollar-Canadian dollar is likely to move higher over the next six months."
Canadian government bond prices were higher across the maturity curve, with the two-year up 10 Canadian cents to yield 1.050 percent and the benchmark 10-year up 55 Canadian cents to yield 2.616 percent.
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