The Canadian dollar reached a four-year low amid speculation U.S. hiring in December outpaced job growth in Canada, adding evidence the country’s economy is falling behind that of its largest trade partner.
The currency headed for its biggest weekly drop in six months after data earlier this week showed Canada’s trade deficit widened while that of the U.S. shrank. Bank of Canada Governor Stephen Poloz, who’s said he expects exports to help drive flagging growth, said this week he has no reason to raise rates and room to cut them if growth deteriorates. A strong U.S. jobs report would bolster the Federal Reserve’s case for slowing monetary stimulus.
“There are significant deflationary pressures happening right now on Canada, and that will keep the Bank of Canada on hold,” said Sebastien Galy, senior foreign-exchange strategist at Societe Generale SA, by phone from New York. “More importantly, the Bank of Canada is implicitly trying to encourage a weakening of the Canadian dollar by taking a very trade-balanced view.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird of the C$1 coin, depreciated 0.3 percent to C$1.0874 per U.S. dollar at 8:10 a.m. in Toronto. It touched C$1.0876, the weakest level since October 2009. One loonie buys 91.96 U.S. cents.
Canadian hiring slowed to 14,100 jobs in December from 21,600 the month before, according to the median estimate of a Bloomberg survey of 17 economists. The unemployment rate is forecast to remain at 6.9 percent.
The U.S. added 197,000 jobs, versus 203,000 the previous month, according to a separate survey of 90 economists. The unemployment rate will remain at 7 percent, economists said.