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Canadian dollar strengthens 0.8% against the greenback
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Canada adds 150,000 jobs in January
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Price of U.S. oil settles 2.1% higher
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2-year yield touches a 3-month high at 4.135%
TORONTO, Feb 10 (Reuters) – The Canadian dollarstrengthened to a one-week high against its U.S. counterpart onFriday as oil prices rose and a blockbuster domestic jobs reportraised the risk that the Bank of Canada could be forced totighten further.
The loonie was trading 0.8% higher at 1.3345 to thegreenback, or 74.93 U.S. cents. That was its highest level sincelast Friday and the biggest gain among G10 currencies.
For the week, it was up while it was up 0.4%.
“It’s a reflection of higher commodity prices, very strongdomestic data and for once the CAD’s ability to trade off theback of underlying fundamentals rather than risk appetite.” saidShaun Osborne, chief currency strategist at Scotiabank, addingthat the strong close “should pave the way for a bit more CADstrength into next week.
The Canadian economy added 150,000 jobs in January, smashingexpectations for a gain of 15,000. It continued an uptrend inemployment that began in September.
“There is quite a bit of momentum still in this very tightlabor market,” Osborne said. “It’s going to be tough to get theBank (of Canada) back in tightening mode but you can’t rule itout.”
The BoC has signaled a pause in its tightening campaignafter last month raising its benchmark interest rate to a15-year high of 4.50%.
Money markets see a roughly 70% chance that the central bankwill tighten again over the coming months, up from 35% beforethe jobs report.
The price of oil, one of Canada’s major exports,settled 2.1% higher at $79.72 a barrel as Russia announced plansto reduce oil production next month.
The Canadian 2-year yield jumped to its highestlevel since Nov. 9 at 4.135% before dipping to 4.089%, up 11basis points on the day.(Reporting by Fergal SmithEditing by Nick Zieminski and Sandra Maler)
