Canadian dollar hovers near six-year low as jobs data disappoint

The Canadian dollar weakened on Friday as employment data for February largely disappointed, holding the currency near the six-year low it hit against the greenback in January.

USD/CAD rose to 1.2766 from the previous close of 1.2685 on the day of jobs data. So far this week, the loonie has fallen 0.95% against the greenback and in the month, it is down 1.8%, more than reversing the 1.65% gain it made in entire February.

Canadian employment change was slightly better than expected but the unemployment rate has risen to a five-month high in the second month of the year, as per the data released on Friday.

Employers de-rolled 1,000 staffers in February after adding 35,400 in January, but less than market expectations of a reduction of 5,000. The participation rate too increased to 65.8% from 65.7% when the consensus was for a repeat of the January number.

Meanwhile, the unemployment rate rose to 6.8%, its highest since September last year and worse than the market expectations of 6.7%, from January's 6.6%.

On Monday, data showed housing starts in Canada recorded 156,300 in February, less than 187,000 a year earlier and the market expectations of 179,000.

Technically, the pair has more risks on the upside, with the 1.2650 resistance has been broken. The pair has almost hit the 30 January peak of 1.2800, which was its highest since March 2009.

Only a break below 1.2400 would lead to a two-month low near 1.2000 with the immediate support at 1.1950.

The loonie's decline this week was made easier with the broad rally in the greenback. The USD index has broken through 100-mark to a new 12-year high of 100.05. It had come off the high slightly on Friday in Asia, but has rebounded back to the 100-mark later in the US session.