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CANADA FX DEBT-Canadian dollar hits nearly three-week low on surprise jobs loss

By Reuters News

By Fergal Smith

TORONTO, Nov 6 (Reuters) - The Canadian dollar fell to a nearly three-week low against its US counterpart on Friday after domestic data showed the economy shed jobs for a third straight month, cooling expectations for Bank of Canada interest rate hikes.

The loonie was trading 0.7% lower at 1.4110 per US dollar, or 70.87 US cents, after touching its weakest intraday level since October 19 at 1.4125.

  • For the week, the currency was on track to lose nearly 1%, after three straight weeks of gains, as equity markets globally were buffeted by a selloff in AI stocks.

  • "The CAD has failed to deliver on the potential for its recent rebound to extend this week," Shaun Osborne and Eric Theoret, FX strategists at Scotiabank, said in a note.

  • "Elevated equity-market volatility has overshadowed pretty much everything else, although the combination of weak Canadian and strong US jobs data has given the CAD an added nudge lower into the weekend," the strategists said.

  • Canadian employment fell 4,700 in October and the jobless rate rose to a six-month high of 6.7%. Analysts had expected a 13,600 jobs gain.

  • Chances the Bank of Canada would tighten in December dipped to 35% from 40%, swap market data showed.

  • The Canadian central bank unveiled on Thursday a new five-year monetary policy framework with the federal finance ministry, keeping its inflation target unchanged at 2%.

  • Also on Thursday, Prime Minister Mark Carney's budget showed that he plans to use windfall oil revenue to boost Canada's productivity and build infrastructure while keeping his previous fiscal goals intact.

  • US nonfarm payrolls increased more than expected in October, boosting the US dollar .DXY against a basket of major currencies.

  • US crude futures CLc1 added to their steep weekly decline, trading 0.1% lower at $90.40 a barrel, after the election losses of US President Donald Trump's Republican Party raised hopes of a de-escalation in the US-Israeli war on Iran. Oil is one of Canada's major exports.

  • The Canadian 2-year yield was down 3.3 basis points at 3.123%, while it fell 6.8 basis points further below the equivalent US rate to a gap of about 139 basis points.

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