The Canadian dollar shot higher on Friday, while bonds fell, as stronger-than-expected June jobs data cemented expectations that the Bank of Canada will raise interest rates next week and likely again in September. The currency was at C$1.0497 to the US dollar, or 95.27 US cents, compared with C$1.0567, or 94.63 US cents, at Thursday's close.
The Canadian dollar drifted higher overnight versus overseas currencies, and then jumped versus the greenback after Statistics Canada said the economy added 34,800 jobs during the month, about double what was expected.
"Given the strength in the employment data, I think that strongly supports the case for the Bank of Canada tightening," said George Davis, chief technical strategist at RBC Capital Markets.
"All the indications would suggest the economy continues to perform above capacity." The bank has left its overnight rate unchanged at 4.25 percent since May 2006, but tight labour markets and strong economic growth have prompted the bank to warn it will likely have to raise rates to stave off inflation.
The rate expectations, combined with strong commodity prices and the impact of foreign-led corporate take-overs, have driven the Canadian dollar steadily higher since March.