Canadian dollar lower, strong U.S. jobs data raises concerns about Fed stimulus

TORONTO – The Canadian dollar closed lower Friday while the greenback gained strength after a strong jobs number raised speculation about what the Federal Reserve may do about winding up a key stimulus program.

Canadian jobs data was also positive, with 13,200 jobs added last month and the jobless rate steady at a post-recession low of 6.9 per cent. Economists had expected about 11,000 jobs would be created.

But the loonie fell 0.15 of a cent to 95.44 cents US

The American currency moved ahead after the U.S. Labor Department reported that the economy cranked out 204,000 jobs, far above the approximately 120,000 reading that had been expected.

However, the U.S. jobless rate ticked up 0.1 of a point to 7.3 per cent, reflecting huge temporary layoffs during a partial U.S. government shutdown in early October.

The data came out a day after U.S. gross domestic product for the third quarter came in at a higher than expected annualized rate of 2.8 per cent.

Both reports heightened speculation that the U.S. Federal Reserve will start winding up its US$85 billion of monthly bond purchases, a stimulus program that has supported a strong rally on markets.

The loonie also fell amid strong housing data.

Canada Mortgage and Housing Corp. estimates there were 17,033 actual starts in October, which extrapolated over 12 months gives a seasonally adjusted annual rate of 198,282 units, compared with 195,929 in September.

Meanwhile, France’s principal credit rating was downgraded again Friday by Standard & Poor’s, which said the country has limited ability to get its public finances in shape and make its economy more competitive.

The agency lowered France’s long-term foreign and local currency sovereign credit ratings one notch to AA from AA-plus. However, the outlook for the rating is “stable,” meaning no further changes are expected in the near term.

On the commodity markets, December crude on the New York Mercantile Exchange edged up 40 cents to US$94.60 a barrel.

December copper was up one cent to US$3.25 a pound, while December gold bullion fell $23.90 to US$1,284.60 an ounce.