Loonie Tumbles as Unemployment Rate Rises

By Joel Cuttiford

Amid a huge miss in expectations for job creation in July, the Canadian dollar has tumbled.

On Friday, the loonie was down 0.42 of a cent to 91.15 cents U.S. as Statistics Canada reported that the economy created merely 200 jobs during July.  Economists had predicted that some 20,000 jobs would be created.  The unemployment rate dipped 0.1 of a point to 7.0 percent.

Traders were risk-averse due to global geopolitical issues, which also weighed on the loonie.

According to CBC News, Traders bought into U.S. Treasuries and the yield on the benchmark 10-year bond stood at 2.42 percent, down from 2.43 percent late Thursday, which was already the lowest level of the year.  The yield dipped to 2.37 percent before rising upon Russia's Interfax report that the nation had ended military exercises near the Ukraine border.

The Russia/Ukraine conflict seemed to be the primary reason for investor concern this past week as traders anticipated the possibility of Russia invading Ukraine.  Sanctions and counter sanctions and their potential effect on economic recovery in Europe caused additional concern.

Elsewhere, President Obama authorized U.S. airstrikes in Northern Iraq with a warning that they are prepared to defend American troops and civilians under siege from the ISIL.

Additionally, the conflict between Israel and Hamas in Gaza continues on.

Gold prices have lowered, with the December bullion contract in New York down $1.50 to $1,311 U.S. per ounce.

September crude in New York gained 31 cents, bringing it to US $97.65 a barrel, while August copper remained unchanged at US $3.18 a pound.


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