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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%
(Adds strategist quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 10 (Reuters) - The Canadian dollar
strengthened to a one-week high against its U.S. counterpart on
Friday as oil prices rose and a blockbuster domestic jobs report
raised the risk that the Bank of Canada could be forced to
tighten further.
The loonie was trading 0.8% higher at 1.3345 to the
greenback, or 74.93 U.S. cents. That was its highest level since
last 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 strong domestic data and for once the CAD's ability to trade off the back of underlying fundamentals rather than risk appetite." said Shaun Osborne, chief currency strategist at Scotiabank, adding that the strong close "should pave the way for a bit more CAD strength into next week.
The Canadian economy added 150,000 jobs in January, smashing expectations for a gain of 15,000. It continued an uptrend in employment that began in September. "There is quite a bit of momentum still in this very tight labor market," Osborne said. "It's going to be tough to get the Bank (of Canada) back in tightening mode but you can't rule it out." The BoC has signaled a pause in its tightening campaign after last month raising its benchmark interest rate to a 15-year high of 4.50%.
Money markets see a roughly 70% chance that the central bank will tighten again over the coming months, up from 35% before the jobs report. The price of oil , one of Canada's major exports, settled 2.1% higher at $79.72 a barrel as Russia announced plans to reduce oil production next month. The Canadian 2-year yield jumped to its highest level since Nov. 9 at 4.135% before dipping to 4.089%, up 11 basis points on the day. (Reporting by Fergal Smith Editing by Nick Zieminski and Sandra Maler)
