Canadian dollar rises despite widening trade deficit; traders look to jobs data
Loonies are pictured in this 2011 file photo. (Jonathan Hayward/THE CANADIAN PRESS)
Malcolm Morrison, The Canadian Press
Published Thursday, February 6, 2014 9:07AM EST
Last Updated Thursday, February 6, 2014 4:17PM EST
TORONTO -- The Canadian dollar closed higher Thursday even as government data showed the country's international trade position worsened in December.
The loonie shed early losses to move up 0.08 of a cent to 90.33 cents US after Statistics Canada reported the trade deficit was $1.7 billion in December. That was up from a revised deficit figure for November, which StatsCan increased to $1.5 billion from $900 million.
The agency reported that merchandise imports grew by 1.2 per cent in December while exports increased 0.9 per cent.
The loonie gained while the greenback weakened after European Central Bank president Mario Draghi said he didn't expect deflation to take hold in Europe because there was no downward price spiral feeding on itself.
Earlier in the day, the ECB opted to leave its key interest rate unchanged at 0.25 per cent.
Another source of U.S. dollar weakness was the latest trade numbers.
The U.S. trade deficit increased in December to $38.7 billion, up 12 per cent over November. U.S. exports slipped 1.8 per cent to $191.3 billion while imports were up 0.3 per cent to $230 billion. But for the year, the deficit fell to its lowest point since 2009 as exports rose to an all-time high.
Traders are now focused on Canadian employment data for January which comes out Friday. Economists are looking for a gain of about 20,000 jobs.
The U.S. government's employment report for January also comes out Friday. Economists expect that 183,000 jobs were created during the month following a meagre 74,000 gain in December that was largely blamed on the weather.
On Thursday, traders took in the latest reading on U.S. jobless insurance claims, which are a proxy for layoffs. They fell last week by a greater than expected 20,000 to 331,000 last week.
On the commodity markets, March crude on the New York Mercantile Exchange moved 46 cents higher to US$97.84 a barrel.
March copper was up four cents to US$3.23 a pound while April gold bullion inched up 30 cents to US$1,257.20 an ounce.