BUSINESS

Loonie jumps, sharp rally in U.S. dollar takes a break;traders look to jobs data

10/06/2014 11:41 EDT | Updated 12/06/2014 05:59 EST
TORONTO - The Canadian dollar bounded ahead more than a cent Monday amid a pause in the strong rally of the U.S. currency.

The loonie moved 1.02 cents to 89.84 cents US.

The dollar sank 3/4 of a U.S. cent Friday to a six-month low following weak trade data and a U.S. currency that appreciated amid stronger job creation last month.

As of Friday, the loonie was down more than three cents from the beginning of September.

The U.S. dollar strengthened considerably over the past few weeks with the U.S. dollar index hitting a four-year high at the end of last week.

A major reason for the stronger greenback has been a euro which has weakened against practically non-existent inflation, poor economic data and a vow from the European Central Bank to get the eurozone out of a deep funk, such as driving interest rates to near zero.

The strengthened greenback has sent commodity prices skidding in recent weeks amid heightened speculation that the U.S. Federal Reserve could move to hike rates sooner than expected.

On Monday, the U.S. dollar weakened while the euro strengthened after hitting 26-month lows.

Colin Cieszynski, chief market strategist at CMC markets, called Monday's action part of a "normal correction of Friday’s big gains."

"With U.S. news flow a lot lighter this week, there is nothing to propel the dollar further, which means we may have seen a buying climax last week and the start of a correction this week," Cieszynski said.

The weaker American currency supported commodity prices with November crude in New York ahead 60 cents to US$90.34 a barrel, December copper was four cents higher to US$3.04 a pound while December gold gained $14.40 to US$1,207.30 an ounce.

On the economic front, the major release of the week comes on Friday when Statistics Canada releases the employment report for September. Economists expect that the economy cranked out about 15,000 jobs.

The agency will also release building permits data for August on Tuesday while September data on housing starts will be released by Canada Mortgage and Housing Corp. on Wednesday.