The Canadian dollar rose using the cost of oil even as a report showed the country unexpectedly lost jobs in February.
The currency reached a four-month high on a rally in oil, which, until last year’s price collapse was Canada’s largest export, and demand for higher-yielding assets around the strength of a stimulus plan from the European Central Bank announced Thursday. It’s trading about 6 cents stronger than the level forecasters expect for mid-year, and 5 cents stronger than where it’s projected to end the year, according to the median estimates of strategists surveyed by Bloomberg.
“For the Canadian dollar, the market’s centered on the squeeze in oil prices,” said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank, who added he expects the currency to weaken longer term to $1.37 per U.S. dollar. “Weak employment numbers probably could shift the possibilities for that Bank of Canada and cause the market to price in another cut.”
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Canada’s dollar continues to be the very best performer within the developed world because the Bank of Canada refrained from cutting rates of interest at its Jan. 20 meeting. The central bank now again kept its benchmark rate unchanged at 0.5 percent.
The loonie was up 1 percent to $1.3219 per U.S. dollar at 9:53 a.m. in Toronto, reaching the the best level since Nov. 5. One loonie buys 75.64 U.S. cents.
Benchmark prices for United states crude are trading at US$38.86 per barrel, up from a February low of US$26.05.
The currency briefly pared gains following a report showed a 2,300 drop in payrolls, in contrast to a forecast for a 10,000 increase, according to the median estimate in a Bloomberg survey of 18 economists. The nation’s jobless rate increased to 7.3 percent from 7.2 percent.
Bloomberg News
