TORONTO - The Canadian dollar turned around an early sharp decline to close slightly closer to parity on Friday.
The loonie finished 0.06 of a cent higher at 99.67 cents US after having lost ground earlier in the day on mixed Canadian employment data.
The Statistics Canada report showed that the jobless rate dropped to 7.6 per cent per cent in November despite having created only 15,200 net new jobs — all part time — as more workers left the labour force and 11,500 were dropped from full-time positions and the private sector.
The loonie fell even further after the U.S. reported its unemployment rate climbed last month to 9.8 per cent in November, a seven-month high as employers added only 39,000 jobs last month, a sharp decline from the 172,000 created in October.
"Despite rising commodity prices, it has been a tough day for the loonie after Canadian job creation came in below expectations, although the unemployment rate was better," said Colin Cieszynski, market analyst at CMC Markets Canada.
"Combined with soft monthly GDP data, it appears that the Canadian economy has been slowing, which means that the Bank of Canada probably won't be raising interest rates again for a while," he wrote in a note.
Still, the Canadian dollar managed to edge higher just before the close as the U.S. dollar dropped 0.9 per cent against an index of six major currencies as traders ramped up investments in alternatives, including gold.
The February bullion contract on the New York Mercantile Exchange was up $16.90 at US$1,406.20 an ounce, as investors sought a safe haven for their money.
The January crude contract added $1.19 to US$89.19 a barrel on the Nymex, while the March copper contract was up two cents at US$4 a pound.
Although the jobs report in Canada was slightly more optimistic than in the United States, the underlying story was one of overall weakness. Manufacturing jobs in Canada, for example, tumbled by 28,600 during the month after remaining roughly flat this year through to October.
"This month's dip will re-ignite concerns on CAD strength, particularly after the Q3 GDP report earlier this week showed a plunge in net exports," said Mark Chandler, head of Canada fixed income and currency strategy at RBC Capital markets.
Meanwhile, Douglas Porter, deputy chief economist at BMO Capital markets, said the mixed Canadian employment picture sends another message to the Bank of Canada that there is no urgency to raise interest rates when it makes its announcement Tuesday.
http://www.canadianbusiness.com
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