Canadian Dollar Hits Eight-Week High on Strong Jobs Data

The Canadian dollar strengthened to an eight-week high against the US dollar on Friday due to stronger-than-expected domestic jobs data. The loonie was trading 0.6% higher at 1.3935 per U.S. dollar, or 71.76 U.S. cents, its strongest intraday level since June 11.

Canadian employment rose by 75,100 jobs in July, far exceeding expectations for a gain of 16,500, while the unemployment rate fell to a two-year low of 6.4%. This suggests that growth momentum seen in the second quarter may have carried on into the start of Q3.

Andrew Grantham, senior economist at CIBC Capital Markets, noted that the stronger-than-expected Canadian data contrasted with a much weaker-than-anticipated U.S. payrolls report. The U.S. economy unexpectedly shed jobs in July, and nonfarm payrolls for the prior two months were revised sharply lower.

The US dollar lost ground against a basket of major currencies due to the conflicting data from both countries. Canadian bond yields rose across a flatter curve as investors weighed signals that Gulf states and Iran were closing in on a deal to reopen the Strait of Hormuz.