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Canadian dollar inches higher as February job creation blows past expectations

By: Malcolm Morrison, The Canadian Press

Posted: 03/8/2013 8:01 AM | Comments: 0 | Last Modified: 03/8/2013 3:29 PM

A stack of loonies sit on American dollar bills on Sept. 20, 2007 in Montreal. THE CANADIAN PRESS/Ryan Remiorz

TORONTO - The Canadian dollar closed slightly higher Friday in the wake of solid job creation data from Canada and the U.S.

The loonie was up 0.03 of a cent to 97.17 cents US as Statistics Canada reported that the economy created 50,700 jobs. That was far higher than the approximately 8,000 jobs that economists had expected.

Canada's unemployment rate stayed steady at seven per cent as more people entered the workforce in a search for jobs, but that was better than the slight increase to 7.1 per cent that economists had expected.

There was also strong data showing a burst of strength in the Canadian housing sector.

Canada Mortgage and Housing Corp. reported that the country’s seasonally adjusted rate of housing starts rose to 180,719 units in February, up from 158,998 the previous month.

CMHC said the main reason for the increase in housing construction was an 18.4 per cent rise in urban starts, led by a 27.7 per cent increase in multiple-unit dwellings such as condos and apartments.

In the U.S., the Labour Department reported that the economy cranked out 236,000 jobs. Economists had raised their expectations to approximately 165,000 in the last couple of days in the wake of employment data from payroll firm ADP and lower jobless insurance claims. Also, the unemployment rate edged down to 7.7 per cent from 7.9 per cent.

There was also positive news from the world’s second-biggest economy.

China’s exports surged 21.8 per cent last month, well ahead of analysts’ expectations of single-digit growth as companies shut down for the Lunar New Year holiday.

Imports fell 15.2 per cent, a decline from January’s 28 per cent growth, which suggested domestic demand might be weakening, but the picture may have been clouded by the holiday, when companies shut down for up to two weeks.

That was the second piece of good news from China this week. China's outgoing premier said earlier that the country would do what was necessary to achieve its target of 7.5 per cent growth this year.

Positive Chinese data usually has a positive effect on markets as the country has been instrumental in helping the global economy dig out of the deep economic downturn that followed the 2008 financial collapse.

However, commodity markets failed to benefit from the trade data with the April crude contract on the New York Mercantile Exchange up 39 cents to US$91.95 a barrel.

May copper was a cent lower to US$3.51 a pound while April bullion gained $1.80 to US$1,576.90 an ounce.

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