TORONTO: The Canadian dollar edged lower against its US counterpart on Friday and posted steeper declines against all the other Group of 10 currencies, as a surprise decline in Canadian employment raised expectations the Bank of Canada would resume its easing campaign.
The loonie was trading 0.1 percent lower at 1.3825 per US dollar, or 72.33 US cents, after moving in a range of 1.3761 to 1.3837. For the week, the currency was down 0.6 percent.
“After last week’s GDP disappointment, a weak Canadian employment report today is serving to keep the CAD tone very defensive and spot trading well above its estimated fair value,” Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note, estimating the currency’s fair value to be at 1.3643.
Canada’s economy shed 65,500 jobs in August, badly missing forecasts of a 10,000 increase,
and the unemployment rate rose to 7.1 percent. That was the highest level of unemployment since May 2016 outside of the pandemic.
Investors see a roughly 90 percent chance the BoC cuts interest rates at a policy decision on September 17, up from 75 percent before the data. The central bank last eased its benchmark rate in March, lowering it to 2.75 percent.
US jobs data also disappointed, which cemented expectations for a Federal Reserve interest rate cut this month and led to the US dollar falling sharply against a basket of major currencies.
The price of oil was another headwind for the loonie, decreasing 2.7 percent to USD61.79 a barrel as expectations grew of higher supply. Oil is one of Canada’s major exports.
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