TORONTO: The Canadian dollar weakened sharply against the greenback on Friday and was hovering around session lows after data showed the domestic economy unexpectedly shed jobs last month.
Canada's economy lost 28,900 jobs in April, defying expectations for a gain of 12,000 and suggesting the labor market is stalled. The unemployment rate held steady at 6.9 percent.
Still, analysts noted how volatile the report tends to be.
"You have to take a 3-month trend to see what is happening. Yes, job growth has slowed in Canada, but it is not the disaster that the April report suggests," said Sal Guatieri, senior economist at BMO Capital Markets.
Heading into the report, analysts had seen the loonie as vulnerable to a drop if the jobs data disappointed after the currency rose strongly earlier in the week. The Canadian dollar had touched a four-month high on Thursday.
"This is just going to push us back into a bigger range now that we're trading back above that C$1.0858 level," said David Bradley, director of foreign exchange trading at Scotiabank in Toronto.
"There's probably more room for US dollar-Canadian dollar to trade a little bit higher in the near-term."
The Canadian dollar was at C$1.0904 to the greenback, or 91.71 US cents, weaker than Thursday's close of C$1.0823, or 92.40 US cents. The loonie hit a session low of C$1.0916.
Overnight, data out of China showed consumer prices posted the smallest rise in 18 months in April, boosting market expectations the country will ease monetary policy.
The loonie can be sensitive to economic developments in China, which is a major consumer of natural resources, but the Canadian job report took precedence.
Canadian government bond prices were mixed across the maturity curve, with the two-year up 1-1/2 Canadian cents to yield 1.067 percent, while the benchmark 10-year was unchanged to yield 2.373 percent.
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