The Canadian dollar slipped against a broadly stronger US dollar on Friday on lingering fears of more tumult in China and as oil prices fell further to notch a 10 percent fall for the week. Investors fear that China, the second-largest economy in the world, is growing more slowly than expected and could further weigh on commodity prices and global economic growth.
The Canadian currency lost 2.2 percent of its value versus the greenback in the first week of the year, with the US currency helped on Friday by surprisingly strong jobs data. "It felt like a day to bandage up wounds from earlier in the week and take stock of what's been going on and square away positions ahead of the weekend," said Brad Schruder, a director of foreign exchange sales at BMO Capital Markets.
"Many suspect, or should I say fear, announcements coming out of Asia," he said. "Eyes are clearly focused on risks emanating out of China." The Canadian dollar settled at C$1.4149 to the greenback, or 70.68 US cents, weaker than Thursday's official close of $1.4097, or 70.94 US cents. The currency brushed off employment data that showed Canada added a greater-than-expected 22,800 jobs in December, in part making up for heavy losses in the previous month, while the unemployment rate stayed at 7.1 percent.
"The story of resilient Canadian job markets generally continues, but I think the underlying details were much softer than the headline on this one," said Derek Holt, vice president of economics at Scotiabank. Meanwhile, US job growth surged in December and employment for the prior two months was revised sharply higher, suggesting that a recent manufacturing-led slowdown in economic growth would be temporary.
The loonie's strongest level of the session was C$1.4059, while its weakest was C$1.4163. On Thursday, it hit its weakest since July 2003 at C$1.4170. US crude prices settled down 11 cents at $33.16 a barrel, and Goldman Sachs said more losses were needed to force producers to cut supplies adequately to address a glut and the bleak demand outlook in the market. Canadian government bond prices were flat to higher across the maturity curve, with the two-year price unchanged to yield 0.418 percent and the benchmark 10-year adding 23 Canadian cents to yield 1.298 percent.