Loonie rises, but how much fuel does it have?

Posted by Zena Olijnyk - BNN

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The Canadian dollar spiked almost a full cent Friday, the biggest jump in more than a year, thanks to better-than-expected jobs data released in Canada and pressures on the American greenback.

But Boris Schlossberg, managing director of Currency Strategy at BK Asset Management in New York said that the loonie’s rise today was a matter of it being a “catch up day,” as it hasn’t been rising as much as other “commodity-based” currencies.

“One of the interesting things to me is how weak the Canadian dollar has been,” Schlossberg said on BNN’s Headline with Howard Green. “It has been a tremendous laggard.” And despite the rally, he wondered “how much fuel” the Canadian dollar has going forward.

The Canadian dollar jumped as high as 1.11 cents Friday – to 96.29 cents U.S. – with Statistics Canada releasing figures for August showing that the economy created 59,000 jobs last month, compared to expectations that 20,000 jobs would be generated. Unemployment dropped to 7.1 percent from 7.2 percent in July.

Meanwhile the greenback fell back as doubts emerged about if, and when, the U.S. Federal Reserve will start to wind up its bond-buying stimulus program known as quantitative easing. The American dollar backed off following U.S. Labour Department data indicating 169,000 jobs were created, missing expectations of about 175,000 new jobs.

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