C$ rebounds from two-week low as domestic jobs soar

TORONTO: The Canadian dollar strengthened against its US counterpart on Friday, reversing from a two-week low earlier in the session after a much stronger-than-expected gain for domestic jobs supported the Bank of Canada's view that the economy is healthy.

Canada added 66,800 jobs in January, the second month of outsized gains in the last three, as services-producing sector jobs soared, Statistics Canada reported. Analysts had forecast a gain of 8,000 positions.

Bank of Canada Governor Stephen Poloz said in January that the Canadian economy is in good shape, although low oil prices are delivering "a material shock" that would cut growth this year.

Money markets doubt that the central bank will raise interest rates further this year, although chances of a hike by December climbed to more than 20 percent from 13 percent after the jobs report, data from the overnight index swaps market showed.

Separate data, from the Canadian Mortgage and Housing Corporation, showed that Canadian housing starts fell less than expected in January to 207,968 units from a revised 213,630 units in December.

At 9:23 a.m. (1423 GMT), the Canadian dollar was trading 0.4 percent higher at 1.3255 to the greenback, or 75.44 US cents. The currency's strongest level of the session was 1.3233, while it touched its weakest since Jan. 25 at 1.3329.

For the week, the loonie was on track to fall 1.2 percent.

The gain for the loonie on Friday came as the price of oil, one of Canada's major exports edged higher. US crude oil futures

were up 0.4 percent at $52.85 a barrel.

Still, oil was also headed for a weekly loss, pulled down by worries about a global economic slowdown.

Investor nerves over slowing global growth weighed on stocks on Friday after signs emerged of a lack of progress on the US-China trade talks ahead of a March 1 deadline.

Canadian government bond prices were lower across much of the yield curve, with the two-year down 1.5 Canadian cents to yield 1.775 percent and the 10-year

falling 9 Canadian cents to yield 1.888 percent.

The gap between Canada's 10-year yield and its US equivalent narrowed by 1.9 basis points to a spread of 75.8 basis points in favor of the US bond.