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TORONTO: The Canadian dollar strengthened against its US counterpart on Friday as oil prices climbed and domestic jobs data supported an earlier start to Bank of Canada rate hikes.

Canada’s economy posted a job gain of 154,000 in November, eclipsing estimates for an increase of 35,000, while the jobless rate dropped to a new pandemic low.

The data could make it more likely that the Bank of Canada sticks to hawkish guidance at an interest rate decision next week despite a more uncertain economic outlook following the emergence of the Omicron coronavirus variant.

In October, the BoC signaled it could begin raising interest rates as soon as April. “Given the strength in jobs and inflation, the risks are skewed toward an earlier start to Bank of Canada rate hikes,” Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets, said in a note.

The price of oil, one of Canada’s main exports, climbed after the producer group OPEC+ said it could review its policy to hike output at short notice if oil demand collapsed. US crude prices were up 3.5% at $68.8 a barrel. The Canadian dollar was trading 0.3% higher at 1.2767 to the greenback, or 78.33 US cents, after earlier touching its weakest intraday level since Sept. 21 at 1.2845.

Analysts are sticking with bullish forecasts on the Canadian dollar, expecting oil prices to rebound and the Bank of Canada to hike interest rates before the US Federal Reserve, a Reuters poll showed.


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