The Canadian dollar rose to almost a one-month high after a report showed May employment gains were higher than forecast.
The currency erased losses after Canada’s jobless rate fell to the lowest since July last month led by full-time positions. Canadian companies added 13,800 jobs, compared with a forecast for 1,800 jobs, according to the median estimate in a Bloomberg survey of economists. The unemployment rate fell to 6.9 percent from 7.1 percent.
“A decent report is what is really the catalyst for today’s move,” said Bipan Rai, executive director of foreign exchange and macro strategy at Canadian Imperial Bank of Commerce in Toronto. “The second quarter is going to be soft for the Canadian economy and we should still be looking for a softer loonie into the start of the next quarter.”
The Canadian dollar has gained 9 percent this year, the second-best performing Group-of-10 currency after the yen, as the price of crude oil has rallied to above $50 a barrel. The loonie, as the Canadian dollar is known, was the best performing among developed currencies until early May, when data showed that Canada’s trade deficit widened to a record in March.
The currency rose 0.2 percent to C$1.2694 per U.S. dollar as of 8:45 a.m. in Toronto. One loonie buys 78.78 U.S. cents.
Hedge funds and other large speculators started betting in the Canadian dollar’s favor in April, ending their longest sustained bearish stance since 2001, according to data from the Commodity Futures Trading Commission. Bullish positions exceeded bearish bets by a net 26,259 contracts as of May 31.
The Canadian dollar will weaken to C$1.30 by the end of the year, according to forecasts compiled by Bloomberg.