LONDON (MarketWatch) -- The Canadian dollar surged Friday to the highest level against its U.S. counterpart in more than a year and a half as Canada's jobless rate fell to a 10-month low. The U.S. unit fell to C$1.0168, breaking through an important support level at C$1.02, after Statistics Canada said the unemployment rate edged down to 8.2% in February from 8.3% in January. The agency said employment rose by 21,000 in February. Economists had expected the unemployment rate to remain unchanged and for new jobs to total 17,000, according to Dow Jones Newswires. Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn., said Canada is a "leveraged play on the United States and from that perspective the currency will benefit as the market focuses on the Fed and the Bank of Canada-interest rate timing." While a bullish case can be made for the dollar on the idea that its output gap will close before Japan and Europe, Canada "appears to be the only other G7 country that can match the U.S.," said strategists at Brown Brothers Harriman. In a research note, they wrote that Canada often sees price pressures earlier as it expands. Combined with a healthier banking system, which serves as an important transmission mechanism for monetary policy, the Bank of Canada is likely to raise rates before the Federal Reserve, the strategists argued.

Source