The Canadian dollar weakened against its U.S. counterpart on Friday and was on track to fall nearly 1 per cent for the week after data showed the economy unexpectedly shed jobs in August.
Canada’s economy lost 51,600 jobs in August, the biggest decline since January, as losses in part-time work overtook gains in full-time employment, data from Statistics Canada showed. Analysts surveyed by Reuters had expected the economy to add 5,000 jobs.
“I think there was some disappointment on the headline release,” said Karl Schamotta, director of global markets strategy at Cambridge Global Payments. “The replacement of part-time positions with full-time to some extent helped to nullify the overall impact.”
Story continues below advertisement
Perceived chances of a Bank of Canada interest rate hike in October dipped to 57 per cent from 60 per cent before the data, the overnight index swaps market indicated.
On Thursday, Bank of Canada Senior Deputy Governor Carolyn Wilkins boosted rate hike expectations when she said in a speech that the central bank had discussed dropping its gradual approach to hiking rates.
In separate data, the Ivey Purchasing Managers Index (PMI) edged up to 61.9 from 61.8 in July, indicating an acceleration in economic activity.
At 3:02 p.m. (1902 GMT), the Canadian dollar was trading 0.2 per cent lower at $1.3170 to the greenback, or 75.93 U.S. cents.
The currency traded in a range of $1.3111 to $1.3190. For the week, the loonie was on track to decline 0.9 per cent.
Losses for the Canadian dollar on Friday came as stocks fell after U.S. President Donald Trump said fresh tariffs are ready to go on $267 billion worth of Chinese imports.
Canada runs a current account deficit and exports many commodities, so its economy could be hurt if an escalation in the trade dispute between the United States and China reduced the global flow of trade or capital.
The price of oil , one of Canada’s major exports, settled nearly unchanged.
The U.S. dollar rose against a basket of currencies after strong U.S. jobs data cemented expectations for the Federal Reserve to increase interest rates further.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The 10-year fell 47 Canadian cents to yield 2.287 per cent.
A deal to revamp the North American Free Trade Agreement remained elusive but differences between Canada and the United States appeared to have narrowed.