CANADA FX DEBT-C$ Gives Up Weekly Gains As US Jobs Data Boosts Greenback – 02/02/2024

The Canadian dollar fell to a one-week low against its U.S. counterpart on Friday, as better-than-expected U.S. jobs data reduced prospects for a rate cut by the Federal Reserve in coming months.

The loonie was down 0.6% at 1.3460, or 74.29 US cents, to the dollar, after hitting 1.3475, its lowest since last Friday. The currency fell 0.1% on the week.

“January's US jobs report all but killed the prospect of the Fed easing monetary policy in March and raised doubts about a rate cut in May, giving a boost to Treasury yields and the dollar,” said Simon Harvey, head of FX analysis. Monex Europe and Monex Canada.

The US dollar strengthened against a basket of major currencies, extending its gains since the start of the year.

“Strong US data today is seen as extending long Canadian dollar positioning, with stocks continuing to trade in the green and the loonie vulnerable to a downward correction in the fourth quarter, despite earnings data at the start of the month,” Harvey said.

Canada's economy grew at an annualized rate of 1.2% in the fourth quarter, preliminary domestic data showed on Wednesday.

The US S&P 500 index hit a new record high, while oil prices, one of Canada's top exports, fell 2% to $72.35 a barrel.

Canadian government bond yields are rising on the curve, tracking US government bond yields. The 10-year benchmark rose 11.7 basis points to 3.388%, after hitting a more than two-week low of 3.230% on Thursday. (Reporting by Bergl Smith, Editing by Nick Zieminski)