Canadian Dollar Heads for Worst Week Since May on Jobs Decline

  • Number of employed fell by 700; survey forecast 5,000 new jobs
  • ‘Economic divergence’ will lead to weaker CAD: CIBC’s Rai

The Canadian dollar is poised for its steepest weekly decline since May after a government report showed the nation unexpectedly lost jobs last month.

The number of employed people in Canada fell by about 700 in June, compared with a gain of 5,000 predicted in a Bloomberg News survey of economists. The decline capped the most sluggish quarter for payrolls in the past two years. At the same time on Friday, a U.S. labor report showed stronger job creation than analysts had forecast.

"The data really supports our expectations for near-term economic divergence between the two economies and our view for a weakening Canadian dollar in the medium term," said Bipan Rai, senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce in Toronto.

The Canadian dollar weakened 0.6 percent to C$1.3078 per U.S. dollar as of 11:08 a.m. in Toronto. The currency has fallen 1.2 percent on the week.

Rai said the Canadian dollar may reach C$1.3150 against the U.S. dollar in coming weeks, its weakest since May.  

Hedge funds and other speculators raised their net bullish position on the Canadian dollar to 7,949 contracts as of June 28, according to data from the Commodity Futures Trading Commission. The Canadian dollar is expected to trade at C$1.30 at the end of the year, according to the median of 49 forecasts compiled by Bloomberg.

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