The U.S. dollar dropped to one-week lows against its Canadian counterpart on Friday, after downbeat U.S. nonfarm payrolls data weighed broadly on the greenback, although a disappointing trade balance report from Canada limited the local currency’s gains.
USD/CAD hit 1.2915 during early U.S. trade, the pair’s lowest since May 26; the pair subsequently consolidated at 1.2940, tumbling 1.21%.
The pair was likely to find support at 1.2906, the low of May 26 and resistance at 1.3143, Thursday’s high.
The Labor Department said the U.S. economy added 38,000 jobs in May, far below expectations for an increase of 164,000. The economy created 123,000 jobs in April, whose figure was revised from a previously estimated gain of 160,000.
However, the report also showed that the U.S. unemployment rate fell to a more than eight-year low of 4.7% last month from 5.0% in April, compared to expectations for a downtick to 4.9%.
Average hourly earnings rose by 0.2% in May, in line with expectations.
The report dampened optimism over the strength of the U.S. job market et lowered expectations for a rate hike by the Fed this month.
Fed Chair Janet Yellen said late last week that it could be appropriate to raise rates in the coming months if the economy and the labor market continue to pick up as expected.
A separate report showed that the U.S. trade deficit widened to $37.40 billion in April from $35.50 billion in March, whose figure was revised from a previously estimated deficit of $40.40 billion. Analysts expected the trade deficit to widen to $41.30 billion in April.
In Canada, official data showed that the trade deficit narrowed to C$2.94 billion in April from C$3.18 billion in March, whose figure was revised from a previously estimated deficit of C$3.41 billion.
Analysts had expected the trade deficit to narrow to C$2.45 billion in April.
The loonie was lower against the euro, with EUR/CAD edging up 0.10% to 1.4625.