Canadian dollar gains on stronger than expected domestic jobs data

The Canadian dollar CADUSD was barely changed against its U.S. counterpart on Friday, holding near a five-month low, as the failure of SVB Financial Group spooked investors, offsetting stronger-than-expected domestic jobs data.

The loonie was trading nearly unchanged 1.3830 to the greenback, or 72.31 U.S. cents, after earlier touching its weakest since Oct. 17 at 1.3861. For the week, the currency was down 1.7%, its biggest weekly decline since September.

“The loonie is not catching any breaks this week,” said Amo Sahota, director at Klarity FX in San Francisco.

“The narrowing of yield spreads was helping earlier in the session but the ongoing fallout on equities led by the SVB failure is just too much and high-beta FX has fallen.”

High-beta currencies tend to be more volatile than the market as a whole.

Wall Street’s indexes fell as investors stressed out about the health of U.S. banks broadly after regulators had to close SVB, a high-profile lender to the technology sector.

The Canadian economy beat expectations by adding 21,800 jobs in February, putting pressure on the Bank of Canada to consider another rate hike after saying it wanted to end its year-long tightening campaign.

On Wednesday, the BoC left its benchmark rate on hold at a 15-year high of 4.50%.

Meanwhile, the U.S. dollar fell against a basket of major currencies after the U.S. unemployment report for February showed inflation pressures were easing.

Canadian government bond yields were sharply lower across the curve, tracking the move in U.S. Treasuries as investors sought out safe havens.

The 10-year fell 15.9 basis points to 2.999%, its lowest level since Feb. 9, while the price of oil, one of Canada’s major exports, settled 1.3% higher at $76.68 a barrel.