CAD Rises After Strong Employment in September

The Canadian dollar rose versus most of its major counterparts after a report showed the nation’s jobless rate fell to a six-year low on the biggest monthly increase in employment since May 2013.

The currency strengthened after job creation more than tripled the average forecast of private sector economists and the economy created a record number of private sector jobs in September. The rise in payrolls comes after the country lost jobs the previous month and reports last week showed gross domestic product growth stalled in July and the country posted an unexpected trade deficit in August.

“The Bank of Canada has been talking about weakness in the labor market as an indicator of slack,” said Andrew Kelvin, senior fixed-income strategist at Toronto-Dominion Bank, by phone. “If you take them at their word on that, they have to regard this as a sign there’s less slack than maybe they believed a month ago. The prospect of a little bit quicker tightening, marginally speaking, implies a stronger Canadian dollar.”

The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, was little changed at C$1.1191 per U.S. dollar at 9:41 a.m. in Toronto. One loonie buys 89.36 U.S. cents. The currency has strengthened 0.5 per cent this week and is down 5.1 per cent this year.

The unemployment rate fell to 6.8 per cent last month, the lowest since December 2008 and down from 7 per cent a month earlier, Statistics Canada said today in Ottawa. The economy created 74,100 jobs, the majority in full-time employment, after recording a decline of 11,000 jobs in August. Economists surveyed by Bloomberg News projected a 20,000 job increase and an unchanged unemployment rate, according to median forecasts.

via Montreal Gazette

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