Canadian dollar rebounds from 10-week low after employment gains

  • Canadian dollar strengthens 0.3% against greenback
  • Canadian economy creates 154,000 jobs in November
  • US Oil Price Rises 3.5%
  • Canadian bond yields rise on a flatter curve

TORONTO, Dec. 3 (Reuters) – The Canadian dollar strengthened against its US counterpart on Friday as oil prices climbed and domestic employment data supported an earlier onset of rate hikes from the Bank of Canada.

The Canadian economy posted a job gain of 154,000 in November, eclipsing estimates of an increase of 35,000, as the unemployment rate fell to a new pandemic low.

Data could make the Bank of Canada more likely to stick to hawkish directions in an interest rate decision next week despite more uncertain economic outlook following the emergence of the coronavirus variant Omicron.

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In October, the BoC signaled that it could start raising interest rates as early as April.

“With strong employment and inflation, risks are skewed toward an earlier onset of Bank of Canada rate hikes,” said Benjamin Reitzes, Canadian rates and macro strategist at BMO Markets capital, in a note.

The price of oil, one of Canada’s top exports, climbed after the producer group OPEC + said it could revisit its policy of increasing production in the short term if demand for oil slumps. US crude prices rose 3.5% to $ 68.8 per barrel. Read more

The Canadian dollar was trading 0.3% higher to 1.2767 for the greenback, or 78.33 cents US, after hitting its lowest intraday level since September 21 at 1.2845 earlier.

Analysts are sticking to bullish forecasts for the Canadian dollar, expecting oil prices to rebound and the Bank of Canada to raise interest rates ahead of the US Federal Reserve, according to a Reuters poll. Read more

The loonie’s gains on Friday followed data showing US employment grew much less than expected in November. Read more

Canadian government bond yields rose on a flatter curve. The 2-year rate rose 7 basis points to 1.043%, while the 10-year rate rose 1 basis point to 1.516%.

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Reporting by Fergal Smith; edited by Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.

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