- Loonie rallies by 1 percent as 40,600 jobs added last month
- Jump takes Bank of Canada interest rate cut off table for now
Canada’s dollar surged the most in three weeks after employers added more jobs in March than economists forecast, fanning speculation the Bank of Canada will refrain from cutting interest rates further.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, gained 1.2 percent to C$1.2988 per U.S. dollar at 5 p.m. in Toronto after Statistics Canada reported that employment increased by 40,600 in March after falling 2,300 the previous month. The job gain exceeded all 21 economist forecasts in a Bloomberg News survey with a median estimate of 10,000 new posts. One loonie buys about 77 U.S. cents.
"We obviously got solid employment data today," said Bipan Rai, executive director of foreign-exchange strategy at Canadian Imperial Bank of Commerce in Toronto. "It’s a good number but there’s still some headwinds for the Canadian economy as we move forward."
The loonie has rallied 6.6 percent against the dollar in 2016 amid signs the economy is weathering a plunge in the price of oil, a key export. The currency slumped 16 percent in 2015 as Canada’s economy struggled to shift toward manufacturing after a commodity rout led the Bank of Canada to cut the key interest rate twice last year. Strong employment numbers decrease the outlook for another cut at the bank’s April 13 meeting.
The jobless rate declined to 7.1 percent from 7.3 percent.
Speculators are bullish on the Canadian currency for the first time since May. Hedge funds and large portfolio managers boosted net bullish positions on the currency in the week ended April 5 to 97 contracts, according to data from the Commodity Futures Trading Commission.