Strong May employment report sends Canadian dollar sharply higher

TORONTO – The Canadian dollar was higher Friday amid a strong jobs report for May.

The loonie was up 0.63 of a cent to 98.1 cents US as Statistics Canada reported that the economy created 95,000 jobs in May, most of them full-time positions. Also, the unemployment rate moved down to 7.1 per cent from 7.2 per cent.

Economists had expected job creation somewhere in the neighbourhood of 15,000 last month.

Meanwhile, traders also took in a stronger-than expected read on American employment last month.

The U.S. Labour Department said that 175,000 jobs were created during May.

The expectation had been for the economy to have cranked out about 165,000 jobs during May.

But analysts had worried that modest expectation for U.S. employment was doubtful after disappointing reads on private sector hiring from payroll firm ADP and the employment component of the Institute for Supply Management’s index on the U.S. non-manufacturing sector.

Commodity prices were mixed with July crude on the New York Mercantile Exchange up 26 cents to US$95.02 a barrel.

August gold declined $10.70 to US$1,405.10 an ounce while copper was unchanged at US$3.32 a pound.

The Canadian currency surged about eight-tenths of a cent on Thursday as a heavy selloff of the U.S. dollar lifted a variety of currencies.

The greenback started to slide after European Central Bank president Mario Draghi indicated that the ECB has no plans right now to further stimulate the region, which is in the midst of a severe economic downturn.

The comment had the effect of attracting investors back into the euro currency.<

The U.S. dollar has also been buffeted over the last couple of weeks after Fed chairman Ben Bernanke said May 22 that the Fed may decide to taper its bond purchase program within its next few policy meetings if the U.S. economy gains steam.<

That program has involved the purchase of US$85 billion in bonds each month to keep rates low.<

Earlier in the morning, new Bank of Canada governor Stephen Poloz indicated the central bank was in no hurry to raise rates from their ultra low levels.