Strong employment numbers for February propelled the Canadian dollar to a three-year high while the TSX climbed for a sixth-straight day to set another record close.
The Canadian dollar traded for 80.04 cents US after hitting an intraday high of 80.26, compared with 79.61 cents US on Thursday.
“Everything’s firing on all cylinders for the Canadian dollar this week. It’s literally up four days in a row,” said Erik Bregar, head of currency strategy at the Exchange Bank of Canada.
Sentiment was buoyed Friday by “blowout” Canadian jobs numbers, he said.
The Canadian economy added 259,000 jobs last month, whipping past expectations to pull the country closer to pre-pandemic employment levels.
One year into the pandemic, Canada’s job market is 599,100 jobs short of where it was in February of last year, or 3.1 per cent below pre-pandemic levels.
“That was some icing on the cake for our Canadian dollar,” Bregar said in an interview.
He said the loonie could climb higher if stock markets and global oil prices continue to rise.
“I wouldn’t be surprised to see us at the 83 cents mark if the S&P and WTI continue higher over the next three months,” Bregar wrote in a recent email. That level hasn’t been reached since May 2015.
The stronger currency would be good for cross-border shoppers if it weren’t for the fact that the border with the U.S. is closed and airlines have cut service at the government’s request to contain the spread of COVID-19.
Still, Canadians can prepay for holidays or purchase and save U.S. dollars for the eventual trip.
The S&P/TSX composite index was down for most of the day but inched up 6.75 points to a record close of 18,851.31 after hitting an intraday low of 17,297.75.
In New York, the Dow Jones industrial average and S&P 500 reached record closes with the 30-stock Dow up 293.05 points to 32,778.64. The S&P 500 index was up 4.0 points at 3,943.34, while the Nasdaq composite was down 78.81 points at 13,319.8.
Markets were down for most of the day as U.S. 10-year bond yields hit a high of 1.642 per cent. Bregar said yields rose on news that primary dealers sold a record amount of treasuries in the week ending March 3.
He said there’s some nervousness about the expiry on March 31 of some regulatory exemptions that allowed banks to horde U.S. treasuries without affecting some leverage ratios.
“I think that’s what’s made overall risk sentiment a little bit softer today,” Bregar said.
He said the stock market doesn’t seem to mind increasing yields as long as the increases are “slow and manageable.”
“What it freaks out about is when it happens too quickly.”
Financials, energy and materials were among the sectors that rose on the TSX.
Energy was up slightly despite lower crude oil prices with shares of Vermilion Energy Inc. up 2.6 per cent and Suncor Energy Inc. 1.7 per cent higher.
The April crude oil contract was down 41 cents at US$65.61 per barrel and the April natural gas contract was down 6.8 at US$2.60 per mmBTU.
Materials rose slightly even though gold was lower.
The April gold contract was down US$2.80 at US$1,719.80 an ounce and the May copper contract was up one tenth of a cent at US$4.14 a pound.
BlackBerry Ltd. gained 10.8 per cent to move technology up while Lightspeed POS Inc. rose 6.9 per cent after announcing another acquisition late Thursday.
North American stock markets ended the week higher despite initial concerns about inflation that ended up being benign.
The TSX gained 2.6 per cent to increase 8.1 per cent so far in 2021. The S&P 500 was also up 2.6 per cent on the week, the Dow 4.1 per cent and Nasdaq 3.1 per cent.