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Loonie lower, jobs report misses expectations

Friday, 9 March 2012

TORONTO - The Canadian dollar was slightly lower Friday morning as a soft jobs report for February reflected a slower economy.

The loonie was down 0.06 of a cent to 100.84 cents US as the Canadian economy unexpectedly shed 2,800 jobs last month.

Economists had expected the economy to create about 15,000 jobs during the month.

"The main message is that the domestic economy is now clearly struggling to post meaningful growth," said BMO Capital Markets deputy chief economist Doug Porter.

"The report has taken a bit of the recent shine off the loonie and will likely temporarily damp down talk of the Bank of Canada soon shifting to a tighter stance."

Statistics Canada also reported that the unemployment rate dipped to 7.4 per cent from 7.6 per cent.

The drop in the unemployment rate occurred not because the economy created jobs, but because the number of Canadians looking for employment fell by 37,900, all in Ontario.

Traders also looked ahead to the release of the U.S. non-farm payrolls report later in the morning. It is hoped that the American economy created at least 200,000 jobs last month.

Meanwhile, there was relief after Greece persuaded the vast majority of its private creditors to slash the value of their Greek bond holdings, which should pave the way for the country’s second massive international bailout.

Greece’s Finance Ministry said Friday that 85.8 per cent of private investors holding its Greek-law bonds had signed up to the deal and that it aimed to use legislation forcing those creditors still holding out to participate. After accounting for bonds that are governed by foreign laws, that proportion drops to 83.5 per cent.

The government said the deal will massively reduce the country’s debt by €105 billion, or about 50 percentage points of gross domestic product.

If the swap had failed, Greece would have faced defaulting on its debts in two weeks when it faced a large bond redemption.

The loonie found some support from rising commodity prices.

The April crude contract on the New York Mercantile Exchange gained 26 cents to US$106.84 a barrel.

May copper advanced a penny to US$3.80 a pound while gold gained $2.70 to US$1,701.40 an ounce.
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Source: Newsy.com - on March 9, 2012

News video: Jobs Report: The Market's Inkblot Test

Jobs Report: The Market's Inkblot Test

The U.S. jobless rate held steady at 8.3%, with the economy adding slightly more jobs than expected in February.

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