(CEP News) – The Canadian dollar fell more than a cent against its U.S. counterpart immediately following Canada’s jobs report.

The Canadian dollar initially tumbled but later clawed back as rising risk appetite sparked a broad U.S. dollar selloff. It is down 0.0037 to 0.8076 against the U.S. dollar (1.2382 USD/CAD) and up 0.35 to 74.34 against the yen.

StatsCan reported a record number of job losses in January with the economy shedding 129,000 jobs, sending the unemployment rate up 0.6 percentage points to 7.2%. Economists were expecting 40k job losses and 6.8% unemployment.

Meny Grauman, economist at CIBC World Markets, said the pace of job losses in Canada is dizzying.

“The post-war period has never seen such a large stretch of monthly job losses, and even more worrying, there is no sign that the deluge is stopping,” he said.

Steve Butler, director of FX trading at the Bank of Nova Scotia, said he is looking for the loonie to weaken considerably over the next few days and has a target of 1.28 by early next week. He also said it will be a matter of time before it breaks out of its current range.

“This data is going to cause the markets to rethink what the bank of Canada is going to do,” he said.

Some economists now expect the Bank of Canada to bring interest rates below 1.00% at its next meeting in March.

Matt Perrier, currency analyst from BMO Capital Markets, said he is not convinced that the USD/CAD will be able to break the 1.30 level. He said he sees that level as a strong buying point for U.S. dollar hedgers.

In the short term, Perrier said he is looking for the pair to start hitting resistance at 1.2761.

Elsewhere in foreign exchange, the U.S. dollar is up 0.84 to 92.07 against the yen and the Dollar Index is down 0.287 to 85.770.

The euro is up 0.0080 to 1.2872 against the U.S. dollar, up 0.0177 to 1.5938 against the Canadian dollar, down 0.0033 to 0.8721 against the pound sterling and is higher by 1.85 to 118.51 against the yen.

The pound sterling is up 0.0147 to 1.4758 against the U.S. dollar and up 0.0273 to 1.8275 against the Canadian dollar.

Source:  Economicnews.ca