Canada’s Dollar Rises to Highest Since November on Jobs Reports

By Chris Fournier

May 8 (Bloomberg) -- Canada’s currency rose to a six-month high after the nation’s employers unexpectedly added jobs last month and U.S. payrolls fell less than forecast, adding to signs the economic slowdown may be moderating.

Canada’s “employment is showing strong resilience,” said Firas Askari, head currency trader in Toronto at BMO Nesbitt Burns, a unit of Bank of Montreal. “The caveat is, don’t read too much into any single number, wait for the trend to clearly show itself. Obviously this is loonie supportive in the short term and I think any U.S. dollar rallies will be sold into.”

The Canadian dollar, known as the loonie, appreciated 1.1 percent to C$1.1576 per U.S. dollar at 9:23 a.m. in Toronto, from C$1.1699 yesterday. One Canadian dollar buys 86.38 U.S. cents. The currency touched C$1.1572, the strongest level since Nov. 5.

The unemployment rate held at 8 percent as employers added a net 35,900 workers in April after a reduction of 61,300 in the previous month, Statistics Canada said today in Ottawa. Economists predicted employment would fall by 50,000, according to the median of 24 estimates in a Bloomberg survey.

Canada’s dollar extended gains after a Labor Department report showed U.S. payrolls fell by 539,000 in April. Employers were forecast to cut 600,000 jobs.

The currency has gained 6.9 percent since April 23, the day Bank of Canada Governor Mark Carney said he wouldn’t immediately print money to buy debt assets and spur growth. The policy, known as quantitative easing, is typically seen as diluting a currency.

‘No Additional Measures’

“The better data certainly suggests the bank can rest a little easier as far as its policy stance goes for the moment,” said Shaun Osborne, chief currency strategist in Toronto at TD Securities Inc., a unit of Canada’s second-largest lender. “For the next few months, it looks like no additional measures from the Bank of Canada.”

The loonie, which rallied before today’s report on speculation the data would be better than expected, is poised for its sixth weekly gain, the longest winning streak since November 2007, as investors venture into higher-yielding assets such as stocks and commodity-linked currencies.

Canada’s dollar will weaken to C$1.22 against its counterpart by year-end, according to the median forecast in a Bloomberg survey of 39 economists.

Canadian government securities dropped, with the yield on the 10-year rising eight basis points, or 0.08 percentage points, to 3.23 percent, the highest since Dec. 1. The 3.75 percent security due in June 2019 fell 68 cents to C$104.55.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net