03/09/2012 07:58 EST | Updated 05/09/2012 05:12 EDT

Canadian dollar closes flat in wake of positive U.S. employment report

TORONTO - The Canadian dollar shook off early weakness and a later surge to close only marginally higher Friday after a strong U.S. employment report for February offset weak Canadian jobs data.

The loonie rose 0.02 of a cent to 100.92 cents US as the U.S. non-farm payrolls report said that the American economy cranked out 227,000 jobs, in line with expectations, while the jobless rate held steady at 8.3 per cent.

Revisions showed even higher job gains for the last two months.

Positive news from Canada's biggest trading partner often strengthens the loonie as an improving U.S. economy means higher demand for commodities and Canadian manufactured goods.

The dollar had earlier been under pressure in the wake of a soft Canadian jobs report for February which reflected a slower economy.

Statistics Canada said that the Canadian economy unexpectedly shed 2,800 jobs last month. Economists had expected the economy to create about 15,000 jobs during the month.

Statistics Canada also reported that the unemployment rate dipped to 7.4 per cent from 7.6 per cent.

The drop in the unemployment rate occurred not because the economy created jobs, but because the number of Canadians looking for employment fell by 37,900, all in Ontario.

The loonie closed off early highs amid a move associated with Greece's success in persuading the vast majority of its private creditors to slash the value of their Greek bond holdings, paving the way for the country’s second massive international bailout.

Greece’s Finance Ministry said earlier Friday that 85.8 per cent of private investors holding its Greek-law bonds had signed up to the deal, and that it aimed to use legislation forcing holdouts to participate.

That meant the credit swap was no longer voluntary for everyone and the International Swaps and Derivatives Association ruled Friday afternoon that the Greek government had triggered a "credit event," meaning that holders of credit-default swaps on Greek bonds will be able to claim insurance payments.

Market reaction to this was muted because the ISDA announcement was expected while banks' exposure was reckoned at only US$3.5 billion.

The Greek government said the deal will massively reduce the country’s debt by €105 billion, or about 50 percentage points of gross domestic product.

If the swap had failed, Greece would have faced defaulting on its debts in two weeks, when it faced a large bond redemption.

The dollar failed to find support from higher prices for commodities.

The April crude contract on the New York Mercantile Exchange ran up 82 cents to US$107.40 a barrel.

Improving demand prospects pushed May copper up seven cents to US$3.86 a pound following and American jobs data and news that China’s inflation fell sharply in February, giving Beijing more leeway to stimulate the world’s second-biggest economy. China is the world's biggest copper consumer.

Consumer price inflation fell to 3.2 per cent from January’s 4.5 per cent.

Gold shed early losses and moved up $12.80 to US$1,711.50 an ounce.