*
Canadian dollar strengthens 0.7% against the greenback
*
Canada adds 150,000 jobs in January
*
Price of U.S. oil rises nearly 1%
*
2-year yield touches a 3-month high at 4.135%
TORONTO, Feb 10 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as investors raised bets the Bank of Canada would be forced to raise interest rates further after a blockbuster domestic jobs report. The Canadian economy added 150,000 jobs in January, smashing expectations for a gain of 15,000. The prior month increase was revised downward but was still large at 69,200. The Bank of Canada has forecast that economic growth will stall in the first half of the year, saying it won't need to raise interest rates further if data is broadly in line with its forecast.
Money markets see a roughly 65% chance that it will tighten again over the coming months, up from 35% before the jobs report. Last month, it raised its benchmark rate to a 15-year high of 4.50%. The Canadian dollar was trading 0.7% higher at 1.3360 to the greenback, or 74.85 U.S. cents, after touching its strongest since last Friday at 1.3353. Adding to support for the loonie, the price of oil, one of Canada's major exports, climbed as Russia announced plans to reduce oil production next month. U.S. crude prices were up nearly 1% at $78.82 a barrel. Canadian government bond yields rose across the curve. The 2-year touched its highest since Nov. 9 at 4.135% before dipping to 4.073%, up 9.4 basis points on the day. (Reporting by Fergal Smith Editing by Nick Zieminski)
