CANADA’S FX DEBT – Canadian Dollar Posts Biggest Gain in 12 Years as Employment Rises
(Adds analyst commentary and details throughout; updates prices)
The Canadian dollar appreciates 2% against the greenback
Touch its highest level since September 23 at 1.3470
US oil price settles 5% higher
10-year yield hits 10-day high
By Fergal Smith
TORONTO, Nov 4 (Reuters) – The Canadian dollar strengthened the most in 12 years against its U.S. counterpart on Friday as oil prices jumped and domestic employment data bolstered bets for another larger than normal interest rate hike by the Bank of Canada next month.
The Canadian economy added 108,300 jobs in October, easily beating forecasts of 10,000 new jobs, with the meteoric rise entirely in full-time work.
Money markets see a 65% chance that the Bank of Canada will raise its benchmark interest rate by half a percentage point in its next policy announcement on Dec. 7, up from around 50% before the data.
The United States also added more jobs than expected last month, but the US dollar did not benefit.
It fell against a basket of major currencies as the price of oil, one of Canada’s top exports, surged as reports that China may ease its tough anti-COVID measures boosted investor sentiment.
“Discussion of China’s COVID policy changes has brightened the global growth outlook, overloading commodities,” said Michael Goshko, senior market analyst at Convera Canada.
U.S. crude prices settled up 5% to $92.61 a barrel, while the Canadian dollar rose 2% to 1.3475 per greenback, or 74.21 US cents, its strongest progress since May 2010.
The currency touched its highest intraday level since September 23 at 1.3470. For the week, it was up 0.9%.
Government of Canada bond yields rose across the curve. The 10-year hit its highest since October 25 at 3.549% before falling to 3.520%, up 10.6 basis points on the day. (Reporting by Fergal Smith; Editing by Kirsten Donovan and Deepa Babington)