The Canadian dollar strengthened to a three-week high against its U.S. counterpart on Friday after domestic data showed that the economy added more jobs than expected last month, reducing concerns about the growth outlook.
The loonie was trading 0.3% higher at 1.4125 per U.S. dollar, or 70.80 U.S. cents, its strongest level since June 19. For the week, the currency was up 0.5%, after five straight weekly declines.
Canada’s economy added a net 18,200 jobs in June, eclipsing estimates for a gain of 10,000, and the unemployment rate edged down to 6.5%, continuing the momentum seen in the prior month despite lingering trade uncertainty.
“On the CAD side, we are likely past peak pessimism being priced in around Canada’s growth outlook,” strategists at TD Securities, including Linda Cheng, said in a note.
Still, the “stable to very modestly hawkish employment data is unlikely to change the imminent BoC outlook,” the strategists said.
The Bank of Canada will hold its overnight rate at 2.25% on July 15 and keep it there well into next year as price pressures remain largely contained and the economy gradually recovers, a Reuters poll showed.
Data on Tuesday showed that Canadian exports rose for the fourth consecutive month in May, adding to evidence that the economy recovered in the second quarter after two consecutive quarters of contraction.
The price of oil, one of Canada’s major exports, fell 1.3% to $71.11 a barrel but was on track for weekly gains as renewed U.S.-Iran fighting disrupted shipping in the Strait of Hormuz.
Canadian government bond yields were mixed across a flatter curve. The 2-year edged up 1.1 basis points to 2.820%, while the 10-year was down 1.2 basis points at 3.514%.