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Loonie rises amid strong U.S. jobs data, smaller trade deficit

Canadian dollar coins.

Paul Chiasson/THE CANADIAN PRESS

The Canadian dollar was little changed Thursday as job creation in the United States during June came in much higher than expected.

The loonie edged up 0.01 of a cent to 93.76 cents US as the U.S. Labor Department reported that the American economy cranked out 288,000 jobs during June while the jobless rate edged down to 6.1 per cent from 6.3 per cent.

Economists had forecast that about 215,000 jobs were cranked out during June, but those estimates ticked higher Wednesday after payrolls firm ADP reported that the private sector created 281,000 jobs in June, much higher than the 205,000 reading that had been forecast.

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Canadian employment data for June will be released July 11.

In other economic developments, Canada's trade deficit with the world narrowed during May. Statistics Canada said the deficit came in at $152-million, down sharply from $961-million in April as export volumes shot up 4.2 per cent to $44.2-billion. It was the second highest value on record and was largely due to a strong showing in the motor vehicle segment. At the same time, imports expanded to $44.3-billion in May, as volumes increased 4.2 per cent.

In the U.S., the trade deficit fell in May as U.S. exports hit an all-time high, helped by a jump in exports of petroleum products. Imports dipped slightly. The Commerce Department says the trade deficit narrowed 5.6 per cent in May to US$44.4-billion after hitting a two-year high of $47-billion in April.

Also, the European Central Bank kept its interest rates unchanged after its monthly policy meeting on Thursday despite signs that the 18-country eurozone economy is losing momentum. Last month, the ECB unveiled a raft of measures designed to shore up the recovery and prevent prices from falling. Among the policies announced was a reduction in the ECB's main interest rate to 0.15 per cent.

Figures released Thursday showed that retail sales were flat in May while the June purchasing managers' index, a gauge of business activity, from financial information company Markit edged back to a six-month low.

On the commodity markets, August crude moved down 44 cents to US$104.04 a barrel.

August bullion was already sharply lower and headed even lower after the jobs data, falling $15.20 to US$1,315.70 an ounce while September copper edged a cent lower to US$3.24 a pound.

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