The Canadian dollar dropped to its lowest level in nearly three weeks on Friday, following unexpected job losses in the country. The loonie weakened by 0.7% to trade at 1.4110 per US dollar, or 70.87 US cents, after hitting an intraday low of 1.4125. This decline marked the currency's worst weekly performance in four weeks, as global equity markets faced volatility due to a selloff in AI stocks.
FX strategists Shaun Osborne and Eric Theoret from Scotiabank noted that the Canadian dollar failed to sustain its recent rebound, with elevated equity-market volatility overshadowing other factors. They also highlighted that weak Canadian jobs data, combined with strong US employment figures, contributed to the loonie's decline.
Canadian employment fell by 4,700 in October, contrary to analysts' expectations of a 13,600 jobs gain. The jobless rate rose to a six-month high of 6.7%, reducing the likelihood of a Bank of Canada interest rate hike in December to 35% from 40%. Meanwhile, the US nonfarm payrolls exceeded expectations, strengthening the US dollar against a basket of major currencies.
US crude futures fell slightly to $90.40 a barrel, extending their weekly decline after the Republican Party's election losses raised hopes of a de-escalation in the US-Israeli war on Iran. The Canadian 2-year yield dropped by 3.3 basis points to 3.123%, widening the gap with the equivalent US rate to about 139 basis points.