C$ Drops As US Data Sparks Flight From Risk

TORONTO - The Canadian dollar was propelled lower Thursday, after unexpectedly weak U.S. June employment figures set off another global flight away from risk.

The U.S. dollar was trading at C$1.1621 at 3:40 p.m. EDT (1940 GMT), from C$1.1520 at 8:00 a.m. EDT (1200 GMT) and C$1.1624 late Tuesday. Canadian financial markets were closed Wednesday for the Canada Day national holiday.

The absence of any major domestic data or other events kept the Canadian dollar in the thrall of external drivers Thursday, and the currency fell alongside others as market players pared back positions in riskier assets ahead of Friday's U.S. Independence Day holiday, when markets in the U.S. will be closed and others sparsely traded.

Chief catalyst for the move was early news of a deeper-than-expected drop of 467,000 U.S. jobs in June, considerably more than the forecast 350,000 decline.

The data reinvigorated a bid for safe haven assets like the U.S. dollar, and sent pro-cyclical currencies like the Canadian dollar tumbling lower alongside oil and other commodity prices.

Oil prices fell further below $70 per barrel Thursday, further pressuring the Canadian dollar.

"The fall in the Canadian dollar on negative risk sentiment today gained some steam as oil sold off, highlighting Canada's exposure to cyclical commodities," said senior foreign exchange trader Brendan McGrath of currency services firm Custom House in Victoria, British Columbia, noting that commodity currencies were among the hardest hit Thursday with losses of over 1.0% on the day.

Thursday's losses nevertheless didn't add up to much from a longer-term Canadian dollar perspective, as they merely reversed the previous day's rally when the Canadian dollar soared on rising risk appetites despite the close of Canadian markets.

Recent seesaw movements still leave the Canadian currency adrift in mostly sideways range-trading in the C$1.1500 to C$1.1600 region.

That pattern is likely to persist during what's expected to be an illiquid and uneventful Friday session, given the lack of U.S. participation due to the holiday long weekend.