Canada Dollar Gains With Oil Even as Employment Trails Forecastby
Crude oil price reaches the highest level since December
Toronto-Dominion expects currency to fall on weak economy
The Canadian dollar rose with the price of crude oil even as a report showed the country unexpectedly lost jobs in February.
The currency reached a four-month high on a rally in crude oil, until last year’s price collapse Canada’s largest export, and demand for higher-yielding assets on the strength of a stimulus plan from the European Central Bank announced Thursday. It’s trading about 6 Canadian 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 focused 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 C$1.37 per U.S. dollar. "Weak employment numbers probably could shift the probabilities for the Bank of Canada and cause the market to price in another cut."
Canada’s dollar has been the top performer in the developed world since the Bank of Canada refrained from cutting interest rates at its Jan. 20 meeting. The central bank this week again kept its benchmark rate unchanged at 0.5 percent.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was up 1 percent to C$1.3219 per U.S. dollar at 9:53 a.m. in Toronto, reaching the the strongest level since Nov. 5. One loonie buys 75.64 U.S. cents.
Benchmark prices for North American crude are trading at $38.86 per barrel, up from a February low of $26.05.
The currency briefly pared gains after a report showed a 2,300 drop in payrolls, compared with 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.