Loonie Drops As Canada Jobless Rate Rises

Loonie Drops As Canada Jobless Rate Rises

The Canadian dollar fell against its major opponents in the European session on Friday, erasing its recent gains, as an unexpected rise in the Canadian jobless rate for June offset optimism over positive employment figures.

Data from the Statistics Canada showed that the Canadian employment grew more than expected in June.

The report said employment rose by 31,800 jobs in June, following a decline of 7,500 jobs in May.

Economists had expected employment to climb by 24,000 jobs.

The unemployment rate rose to 6.0 percent in June from 5.8 percent in May. The unemployment rate was expected to be unchanged.

Separate data showed that Canada's merchandise trade deficit widened more than forecast in May.

The trade deficit widened to C$2.8 billion in May from C$1.9 billion in April. Economists were looking for a shortfall of C$2.2 billion. Imports rose 1.7 percent, while exports edged down 0.1 percent.

Further weighing on the currency was a decline in oil prices.

Crude for August delivery dropped $0.28 to $72.66 per barrel.

Oil prices were weighed by an unexpected build in U.S. oil inventories last week.

Crude inventories rose 1.2 million barrels in the week to June 29, compared with analysts' expectations for a decrease of 3 million barrels, according to the EIA.

The currency fell against its major counterparts in the Asian session, barring the yen.

The loonie retreated to 84.07 against the yen, from a 3-day high of 84.42 hit at 8:30 am ET. The loonie is likely to find support around the 83.00 level.

Preliminary figures from the Cabinet Office showed that Japan's leading index increased more than expected in May to the highest level in six months.

The leading index, which measures the future economic activity, climbed to 106.9 in May from 106.2 in April. The index was forecast to rise to 106.6.

The loonie fell to weekly lows of 1.5443 against the euro and 0.9770 versus the aussie, from its early highs of 1.5348 and 0.9697, respectively. The next likely support for the loonie is seen around 1.58 against the euro and 0.99 versus the aussie.

The loonie that climbed to a new 3-week high of 1.3086 against the greenback soon after the data, eased to 1.3148. At Thursday's close, the pair was worth 1.3131.

Data from the Labor Department showed that the U.S. employment grew more than expected in June.

The report said non-farm payroll employment jumped by 213,000 jobs in June after surging up by an upwardly revised 244,000 jobs in May.

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