TORONTO – The Canadian dollar closed higher Friday as employment data for January came in ahead of expectations.
The loonie closed up 0.26 of a cent to 90.59 cents US as Statistics Canada said that 29,400 jobs were created after the economy shed 44,000 jobs in December. Economists had expected that the economy would create about 20,000 jobs last month.
Canada’s national unemployment rate slid to 7.0 per cent in the first month of the year, compared with 7.2 per cent in December.
The loonie also benefited from a greenback that weakened on a big jobs miss in the United States, where the Labor Department reported that 113,00 jobs were created in January against the approximately 180,000 that had been expected.
Still, more people began looking for work in January, and some of the jobless were hired, reducing the unemployment rate to 6.6 per cent from 6.7 per cent. That’s the lowest since October 2008.
The performance followed a meagre gain of 74,000 jobs in December that was largely blamed on the weather.
The January employment report has been seen as key as markets have experienced much volatility in recent weeks on worries of a possible slowing of manufacturing in China and the United States.
Emerging economies have also been a worry because markets in those countries have been hit as the Federal Reserve began to cut back on its key stimulus measure of massive bond buying. The stimulus had kept long long-term rates low and encouraged a flood of cheap money into emerging markets.
But the Fed has moved twice in the past two months to cut back on those asset purchases, down a total of $20 billion to $65 billion a month, and the emerging markets now have to deal with an outflow of funds.
Traders also took in the final speech by outgoing Bank of Canada senior deputy governor Tiff Macklem.
He says while the fundamental drivers of growth and future inflation appear to be strengthening, inflation is expected to remain well below target for some time, which means the downside risks have grown in importance.
He added that the central bank is still trying to figure out exactly why inflation has been on the decline since 2012 and fallen below its ideal target of two per cent.
On the commodity markets, March crude on the New York Mercantile Exchange was $2.04 higher to US$99.88 a barrel.
March copper moved ahead one cent to US$3.24 a pound while April gold bullion gained $5.70 to US$1,262.90 an ounce.