Canadian Dollar Gains as Job Reports Boost Appetite for Risk

By Chris Fournier and Matt Townsend

Sept. 4 (Bloomberg) -- Canada’s dollar advanced the most in more than a week as investors’ appetite for riskier assets grew after government reports showed the nation unexpectedly added jobs in August and the U.S. shed fewer positions than forecast.

“People are putting risk back on,” said John Curran, a Toronto-based senior vice president at CanadianForex Ltd., an online foreign-exchange dealer. “The Canadian dollar should head back down toward the bottom of the well-established range.” A “rather large” option expiry next week at C$1.10 should limit Canadian dollar gains, he said.

The Canadian currency appreciated as much as 1.2 percent to C$1.0887 per U.S. dollar, the biggest intraday advance since Aug. 27, before trading at C$1.0969 at 9:09 a.m. in Toronto, from C$1.1019 yesterday. One Canadian dollar purchases 91.17 U.S. cents.

Employment in Canada increased by a net 27,100 jobs last month after a decline of 44,500 in July, the nation’s statistics agency reported today in Ottawa. The median forecast of 21 economists in a Bloomberg News survey was for a decrease of 15,000 jobs.

“The number was well above consensus,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada in Toronto. “It certainly suggests an improvement. It’s not necessarily a defining moment in Canadian job creation, but it certainly suggests a more bullish direction for the Canadian economy and, by extension, the Canadian dollar.”

U.S. Job Report

U.S. employers eliminated 216,000 jobs in August after a revised decrease of 276,000 jobs in the previous month, the Labor Department reported today in Washington. The median forecast of 79 economists surveyed by Bloomberg was for a reduction of 230,000. The unemployment rate increased to 9.7 percent from 9.4 percent in July.

The Canadian currency, nicknamed the loonie for the image of the aquatic bird on the C$1 coin, appreciated 11 percent this year. It weakened 1.5 percent against the greenback last month, performing worse than 13 of the 16 most-traded currencies tracked by Bloomberg. The loonie was the No. 1 performer in July, gaining 7.9 percent.

Canada’s dollar will strengthen by the end of next year against its U.S. counterpart to C$1.07, according to the median forecast of 37 economists and analysts in a Bloomberg survey.

To contact the reporters on this story: Matt Townsend in New York at mtownsend9@bloomberg.net; Chris Fournier in Montreal at cfournier3@bloomberg.net