File Photo: A Canadian dollar coin, commonly known as a “loonie,” is pictured in this illustration image taken in Toronto on January 23, 2015. Portal/Mark Blinch/File Photo Purchase license rights
- Loonie is up 0.4% against the greenback
- Loonie weakens by 0.2% on a weekly basis
- Canada added 39,900 jobs in August
- The Canada-U.S. two-year gap narrows by 3.6 basis points
TORONTO, Sept 8 (Portal) – The Canadian dollar strengthened against its U.S. counterpart on Friday as stronger-than-expected domestic jobs data maintained the prospect of another rate hike by the Bank of Canada after the central bank was previously sidelined Week.
The loonie traded 0.4% higher at 1.3625 to the greenback, or 73.39 U.S. cents, after moving in a range of 1.3609 to 1.3689.
Still, it fell 0.2% this week, a day after hitting a five-month low of 1.3694.
Canada’s economy added 39,900 jobs in August, more than double the estimated 15,000 jobs, and the unemployment rate remained at 5.5%, a sign of underlying economic strength despite high interest rates.
Money markets see a 44% chance of another BoC rate hike by year-end, up from 36% before the data was released. On Wednesday, the central bank left its key interest rate at a 22-year high of 5% after raising them in June and July, indicating that the economy had entered a period of weaker growth.
The jobs data is “not strong enough to prompt an immediate rethink on the pause, but it is certainly not soft enough to rule out further rate hikes,” Doug Porter, chief economist at BMO Capital Markets, said in a note.
In support of the loonie, U.S. crude oil futures rose nearly 1% to $87.72 a barrel as investors focused on tighter supply despite broader macroeconomic uncertainty, while the U.S. dollar (.DXY) rose against a basket of important currencies fell slightly.
The Canadian 2-year yield rose 5.9 basis points to 4.669%, while the spread between it and its U.S. equivalent narrowed 3.6 basis points to 30.9 basis points in favor of the U.S. bond.
Reporting by Fergal Smith; Edited by Mark Heinrich and Leslie Adler
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