Canadian dollar steadies as jobs gain supports rate hike bets

Toronto

THE Canadian dollar was little changed against its US counterpart on Friday, recovering from a three-week low, as domestic jobs data supported expectations for the Bank of Canada (BOC) to begin hiking interest rates over the coming months.

The Canadian dollar, also known as the loonie, was trading nearly unchanged at C$1.2454 to the greenback, or 80.30 US cents, after touching its weakest level since Oct 12 at C$1.2479.

"The Canadian jobs data support the notion of earlier rate hikes in Canada suggested by last week's BOC outcome," strategists at Scotiabank, including Shaun Osborne, said in a note.

"Meanwhile, other major central banks are pushing back against the idea of earlier rate increase," they added.

The Bank of Canada had said the previous week that it could begin hiking interest rates in April, about three months earlier than previously thought.

Money markets expect lift-off as soon as March.

The Canadian economy added 31,200 jobs in October, the fifth straight month of gains, and the jobless rate slipped to the lowest at 6.7 per cent, since the Covid-19 pandemic started.

For the week, the loonie was down 0.6 per cent, pressured by a pullback in the price of oil, one of Canada's major exports.

Oil rebounded on Friday after the Organization of the Petroleum Exporting Countries+ (Opec+) producers rebuffed a US call to raise supply to cool the market, sticking to plans for a gradual increase in output after cuts made in the face of the coronavirus crisis.

US crude prices settled 3.1 per cent higher at US$81.27 a barrel, while the US dollar touched its highest level in more than one year against a basket of major currencies as data showed that US job growth picked up in October.

Canadian government bond yields eased across the curve, tracking the move in US Treasuries.

The 10-year was down 5.1 basis points at 1.603 per cent, after touching 1.766 per cent on Monday, its highest level since May 2019. REUTERS