TORONTO: The Canadian dollar strengthened on Friday to a nearly 10-month high against its US counterpart
after stronger-than-expected domestic jobs data boosted chances of an interest rate increase by the Bank of Canada as soon as next week.
Canada's economy added 45,300 jobs last month, topping the 10,000 gain forecast by economists. The unemployment rate dipped to 6.5 percent, even as more people were looking for work.
"It is a pretty solid report ... if you were leaning toward a hike in July this would do nothing to dissuade you," said Andrew Kelvin, senior rates strategist at TD Securities.
Chances of an increase at next week's rate meeting rose to 91 percent from 86 percent before the jobs report, data from the overnight index swaps market showed.
Expectations of a rate increase have been rising since top Bank of Canada officials said in June that a pair of 2015 interest rate cuts had done their job in cushioning the economy from collapsing oil prices.
At 9:24 a.m. ET (1324 GMT), the Canadian dollar was trading at C$1.2894 to the greenback, or 77.56 US cents, up 0.7 percent.
The currency's weakest level of the session was C$1.2994, while it touched its strongest since Sept. 8 at C$1.2888.
The loonie strengthened even as prices of oil, one of Canada's major exports, fell.
US crude was down 1.82 percent at $44.69 a barrel after data showed US production rose last week just as Organization of the Petroleum Exporting Countries exports hit a 2017 high, casting doubts on efforts by producers to curb oversupply.
The US dollar rose against a basket of major currencies after US job growth surged more than expected in June and employers increased hours for workers, signs of labor market strength that could keep the Federal Reserve on course for a third interest rate increase this year despite benign inflation.
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