The Canadian dollar CADUSD gave back some of its weekly advance against the greenback on Friday as a smaller-than-expected domestic jobs gain supported bets for another interest rate cut at an upcoming policy decision by the Bank of Canada.
The loonie was trading 0.5 per cent lower at 1.4360 to the U.S. dollar, or 69.64 U.S. cents, after moving in a range of 1.4280 to 1.4376.
For the week, the currency was on track to gain 0.7 per cent as the U.S. dollar posted broad-based declines and the United States delayed tariffs imposed on Canadian goods.
Canada’s economy added 1,100 jobs in February, falling short of the 20,000 increase that economists estimated, while the unemployment rate held steady at 6.6 per cent. U.S. jobs data also fell short of estimates.
“Whether or not February’s stall in (Canadian) hiring is the first crack caused by tariff uncertainty, or simply the product of data volatility, it is likely that further weakness will be seen in the months ahead due to those ongoing trade tensions,” Andrew Grantham, a senior economist at CIBC Capital Markets, said in a note.
“While the Bank of Canada can’t solve the tariff issue with lower interest rates, it can help the economy transition towards other growth drivers.”
Investors see a 75 per cent chance the BoC cuts its benchmark rate by 25 basis points on March 12, up from 71 per cent before the data. Since June, the central bank has eased by two percentage points to leave the policy rate at 3 per cent.
U.S. President Donald Trump has suspended until April 2 tariffs of 25 per cent he had imposed this week on most goods from Canada and Mexico.
The price of oil, one of Canada’s major exports, was trading 2.7 per cent higher at $68.17 a barrel, recouping some recent losses.
The Canadian 10-year yield fell 5.5 basis points to 3.015 per cent, outpacing a decline in U.S. Treasury yields.