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Loonie down half a cent

The Canadian dollar dropped more than half a cent early Friday as stronger U.S. jobs numbers sent the greenback soaring, while numbers from Canada beat expectations, but not by much.

The loonie moved down 0.51 of a cent to 94.54 cents US before stock markets opened.

Statistics Canada said the official unemployment rate remained unchanged at 7.1 per cent last month as employers pulled back after a wild month of hiring in May.

The agency reported the economy shed a mere 400 jobs in June, a statistically insignificant number. It was also better than the 12,500 jobs economists had expected would be lost in the hangover from the hiring binge seen in May, when 95,000 new jobs were added.

Results from the U.S. left traders more encouraged.

The U.S. Labor Department said U.S. employers added 195,000 jobs in June and hiring was more robust in the two previous months than earlier estimated. Hiring for April and May was revised higher, which suggests job growth is accelerating.

BMO Capital Markets chief economist Doug Porter said in a note that Canada's unemployment rate finished the first half of the year where it started.

"Underlying job growth has clearly geared down, but has not collapsed and we expect it to remain mild in the second half, pointing to some modest improvement in the jobless rate," Porter said in a note.

"The combination of a wishy-washy Canadian employment report, and a solid U.S. report is a mild negative for the Canadian dollar, but we would stress good news for the U.S. economy is ultimately good news for Canada as well."

In commodities, the August crude contract on the New York Mercantile Exchange was ahead 87 cents at US$102.11 a barrel.

August gold bullion dropped $28.40 to US$1,223.50 an ounce on the Nymex.

The Canadian Press

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