* C$ at C$1.0202, or 98.02 U.S. cents
* Canadian, U.S. jobs data far weaker than expected
* Markets may start to speculate on Bank of Canada easing
By Andrea Hopkins
TORONTO, April 5 The Canadian dollar weakened to
a nearly two-week low against its U.S. counterpart on Friday
after both U.S. and Canadian employment data came in far weaker
than expected, erasing a short-lived rally by the currency to
The Canadian currency fell to C$1.0220 to the U.S.
dollar, or 97.85 U.S. cents, after data showed Canada
unexpectedly lost jobs in March and U.S. employers added far
fewer jobs than expected, raising fears that the North American
economic recovery was not as robust as previously thought.
Canada's economy shed 54,500 jobs in March, more than wiping
out the previous month's big gain and pushing up the jobless
rate to 7.2 percent from 7.0 percent, Statistics Canada data
indicated on Friday. Market analysts had forecast an increase of
The U.S. job market was little better. U.S. employers added
just 88,000 positions last month, the slowest pace in nine
months, well below the 200,000 gain expected by analysts polled
by Reuters. The data was seen as a sign that Washington's
austerity drive could be stealing momentum from the economy.
Canadian trade data also disappointed. Lower exports and
slightly higher imports pushed Canada's trade deficit in
February up to C$1.02 billion ($1.01 billion) from a revised
shortfall of C$746 million in January.
"It was a pretty sorry lot of data right across the board,
not just the employment number but the trade numbers were a
disappointment as well. Compounding that was the weakness that
we saw in the U.S.," said Doug Porter, chief economist at BMO
"I found it very strange the dollar had been as strong as it
was heading into these numbers, and it has clearly taken a step
back in wake of this ugly set of figures from both Canada and
At 9:06 a.m. (1306 GMT) the Canadian dollar was at
C$1.0202 to the U.S. dollar, or 98.02 U.S. cents, nearly a cent
weaker than Thursday's North American session close at C$1.0123
to the U.S. dollar, or 98.78 U.S. cents.
The Canadian currency had notched 6-week highs near C$1.01
on Thursday as the yen weakened on Bank of Japan stimulus news
and the euro surged higher amid comments by European Central
Bank head Mario Draghi.
While BMO's Porter said the weakness in Canada's economy
would not be enough to push the Bank of Canada into easing
monetary policy, markets would start talking about the
possibility. Even a long-shot possibility of lower interest
rates could drive investors away from the Canadian currency.
Overnight index swaps, which trade based on expectations for
the central bank's key policy rate, showed that after the data
traders increased their small bets on a rate cut in late 2013.
Still, the weak jobs numbers in the United States should
limit the downside to the Canadian dollar, said Paul Ferley,
assistant chief economist at Royal Bank of Canada.
"The U.S. number could trump the Canadian numbers in the FX
space, as their employment numbers also came in much weaker than
expected ... so concern about the U.S. recovery could limit the
weakness in the Canadian dollar," Ferley said.
The price of Canadian government debt was higher across the
curve as investors fled to safety. The two-year bond
was up 7 Canadian cent to yield 0.958 percent while the
benchmark 10-year bond rose 68 Canadian cents to
yield 1.721 percent.