The Canadian dollar strengthened to its highest in nearly three weeks against the greenback on Friday as stocks and oil prices climbed and after domestic data showed further jobs gains, ahead of next week’s interest rate decision by the Bank of Canada.
At 3:38 p.m., the Canadian dollar was trading 0.7 per cent higher at 1.3399 to the greenback, or 74.63 U.S. cents. The currency touched its strongest level since Dec. 17 at 1.3381.
For the week, the loonie was up 1.8 per cent, its biggest advance since September.
“The Canadian dollar has been a strong performer,” said Alfonso Esparza, a senior currency analyst at OANDA. “We have seen some sort of recovery in oil prices and also the job numbers were solid. Following the huge November data point we expected a bit of a slowdown.”
Canada added 9,300 jobs in December on an increase in part-time hiring, slightly more than markets had expected after a record 94,100 jobs were created in the previous month, Statistics Canada data indicated.
Still, money markets expect the Bank of Canada to leave its benchmark interest rate on hold at 1.75 per cent next week and through the rest of the year. In November, before a sell-off in stocks and oil prices deepened, the market had expected rates to rise to about 2.50 per cent by the end of 2019.
The price of oil, one of Canada’s major exports, climbed on Friday after proposed trade talks between the United States and China eased some fears about a global economic slowdown. U.S. crude oil futures settled 1.9 per cent higher at $47.96 a barrel.
Wall Street rebounded after a strong U.S. payrolls report and remarks from Federal Reserve Chairman Jerome Powell that suggested the central bank would be flexible with monetary policy.
Powell’s comments pressured the U.S. dollar, which declined against a basket of major currencies.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell Canadian cents to yield 1.842 per cent and the 10-year declined 82 cents to yield 1.919 per cent.
On Thursday, the 10-year yield touched its lowest intraday level in more than 16 months at 1.814 per cent.
Separate data from Statistic Canada showed that Canadian producer prices fell by 0.8 per cent in November from October, the largest drop in almost two years, thanks largely to cheaper energy and petroleum products.