The Canadian dollar weakened on Friday after robust US jobs data impressed the market more than a stronger-than-expected Canadian employment report, while a downgrade of Greece's credit rating also fuelled greenback buying. Both US and Canadian jobs figures for January showed gains but the US numbers were more unambiguously positive, boosting expectations the Federal Reserve will raise interest rates by mid-year, while Canadian rates are seen likely to decline.
A downgrade of Greece's sovereign debt rating by Standard & Poor's, as the country's newly elected leftist government seeks to renegotiate its debt obligations to the European Union, also spurred safe-haven buying of the greenback. "It's been an unambiguous bid for the US dollar across the board," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The Canadian currency hit C$1.25, or 80 US cents, soon after the jobs reports were released, before weakening steadily through the session to close at C$1.2524, or 79.85 US cents. It closed on Thursday at C$1.2424. It gained 1.5 percent on the week, helped by several surges on the back of crude oil price gains. Canada is a major oil producer. Canadian government bond prices were lower across the maturity curve, with the two-year down 13 Canadian cents to yield 0.499 percent and the benchmark 10-year off 86 Canadian cents to yield 1.453 percent.
National Bank's Spitz said a speech on Tuesday by Bank of Canada Senior Deputy Governor Carolyn Wilkins should clarify the central bank's thinking after its shock January rate cut. "In light of the lack of transparency with respect to the last Bank of Canada cut I think we should rightfully be looking for some guidance this time around," he said. "It represents an opportunity for the bank to express its views and the market will be paying a lot of attention to it."
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