Canadian dollar rises amid strong U.S. jobs data, smaller trade deficit

TORONTO – The Canadian dollar closed higher Thursday as job creation in the United States last month came in much higher than expected.

The loonie edged up 0.24 of a cent to 93.99 cents US as the U.S. Labor Department reported that the American economy cranked out 288,000 private sector and government jobs in June, while the U.S. jobless rate edged down to 6.1 per cent from 6.3 per cent.

Economists had forecast that about 215,000 jobs were created in June, but those estimates ticked higher Wednesday after payrolls firm ADP reported that the private sector created 281,000 jobs, much higher than the 205,000 reading that had been forecast.

Canadian employment data for June will be released July 11.

In other economic developments, Canada’s trade deficit with the world narrowed in May. Statistics Canada said the deficit came in at $152 million, down sharply from $961 million in April as export volumes shot up 4.2 per cent to $44.2 billion. It was the second-highest value on record and largely due to a strong showing in the motor vehicle segment. At the same time, imports expanded to $44.3 billion in May, as volumes increased 4.2 per cent.

In the U.S., the trade deficit fell in May as U.S. exports hit an all-time high, helped by a jump in exports of petroleum products. Imports dipped slightly. The Commerce Department says the trade deficit narrowed 5.6 per cent in May to US$44.4 billion after hitting a two-year high of $47 billion in April.

Also, the European Central Bank kept its interest rates unchanged after its monthly policy meeting on Thursday despite signs that the 18-country eurozone economy is losing momentum. Last month, the ECB unveiled a raft of measures designed to shore up the recovery and prevent prices from falling. Among the policies announced was a reduction in the ECB’s main interest rate to 0.15 per cent.

Figures released Thursday showed that retail sales were flat in May while the June purchasing managers’ index, a gauge of business activity from financial information company Markit, edged back to a six-month low.

On the commodity markets, August crude moved down 42 cents to US$104.06 a barrel.

The jobs data pushed August gold bullion lower, falling $10.30 to US$1,320.60 an ounce while September copper edged a cent higher to US$3.28 a pound.