Canadian Dollar Drops as Oil Declines & Unemployment Grows

The Canadian dollar fell yesterday and extended its drop today after crude oil declined, while unemployment in Canada unexpectedly increased last month and employment growth was lower than anticipated.

The Canadian unemployment rate rose from 7.4 percent in November to 7.5 percent in December, while most specialists in the labor market expected it to stay unchanged. Canadian employers added 17,500 jobs last month, compared to the median forecast of 17,800. That’s still better than a decline by 18.600 in November.

Crude oil was little changed at $101.90 per barrel in New York today after it dropped $1.41 to $101.81 yesterday as US inventories increased and the European crisis damped demand. The performance of the Canadian currency depends on oil prices as crude is the most important export commodity of Canada. Crude oil may yet advance on tensions around Iran, boosting Canada’s dollar.

USD/CAD rose from 1.0195 to 1.0209 and CAD/JPY advanced from 75.56 to 75.66 as of 13:39 GMT today. Meanwhile, EUR/CAD retreated from 1.3038 to 1.3006.

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Earlier News About the Canadian Dollar:

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Canadian Dollar Rises as Commodities Jump

Canadian dollar is higher as commodities see a sharp jump in prices. The latest ISM data in the United States is helping matters, especially for the loonie, but the manufacturing expansion in China and Australia is also helping quite a bit.

With economic data improving for the United States and for other countries, optimism is running high. That means that commodity prices are improving and commodity currencies, like the loonie, are getting a boost.

The Canadian dollar is also benefitting from the good news in the United States since the country is Canada’s biggest trading partner. With news of economic recovery, there are expectations that demand will increase, further helping the Canadian dollar.

Also helping the loonie is a gain in oil prices. Canada relies heavily on oil prices, and the tensions between Iran and the West are putting upward pressure on oil. As a result, the loonie is expected to continue to see solid gains today.

There are still concerns about what’s next for the eurozone, though. Concerns about a European banking crisis are looming in the background, but for now there is a great deal of optimism and risk appetite.

At 14:46 GMT USD/CAD is lower at 1.0103, down from the open at 1.0186. GBP/CAD is also lower at 1.5748, down from the open at 1.5810.