TORONTO – The Canadian dollar fell against its U.S. counterpart on Friday and was on track for a weekly decline as the intensifying war in Ukraine triggered a flight to quality, overshadowing encouraging U.S. jobs data.
Equity markets globally sank, while commodities and the save-haven U.S. dollar soared as the war in Ukraine escalated, with Russia seizing a big nuclear plant.
U.S. employers hired far more workers than expected in February, pushing the labor market closer to maximum employment. Canada sends about 75% of its exports to the United States, including oil.
U.S. crude prices were up 3.4% at $111.28 a barrel as fears over disruption to Russian oil exports in the face of Western sanctions offset the prospect of more Iranian supplies in the event of a nuclear deal with Tehran.
Canada’s dollar will strengthen over the coming year as soaring commodity prices boost the domestic economic outlook and the Bank of Canada hikes interest further, but gains for the loonie will be less than previously thought, a Reuters poll showed.
The loonie was trading 0.7% lower at 1.2773 to the greenback, or 78.29 U.S. cents, its biggest decline since Jan. 3.
The currency touched its weakest level since Monday at 1.2790. For the week, it was on track to decline 0.5%.
The value of Canadian building permits fell by 8.8% in January from December, Statistics Canada said. Analysts had expected a gain of 2.0%.
Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year fell 7 basis points to 1.708%.
(Reporting by Fergal Smith; editing by Jonathan Oatis)
