TORONTO (Reuters) - The Canadian dollar jumped to a more than one-week high against its U.S. counterpart on Friday and outperformed all other major currencies after data showed U.S. employers stepped up hiring in October.
The currency brushed off a tepid domestic employment report to cheer a larger-than-expected gain in U.S. payrolls that signaled hope for an economic recovery in Canada's biggest trading partner.
"We would have thought initially at first blush that the weakness in the Canadian data would have mitigated Canadian dollar gains," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
"That has not turned out to be the case."
The currency hit an intraday high of C$0.9921, or $1.0080, its strongest level since October 25, even though the U.S. dollar .DXY itself rallied to a near two-month peak against a basket of currencies after the release of the U.S. jobs numbers, the last major report card on the economy before Tuesday's presidential election.
The Canadian dollar ended the North American session at C$0.9956 to the greenback, or $1.0044, compared with Thursday's close of C$0.9968, or $1.0032. It ended the week up 0.2 percent.
"The financial market flows, the (speculative) flows, asset management flows, real money flows have all been selling U.S. dollars against Canada," Spitz said.
Looking ahead, he said he saw U.S. dollar support around C$0.9890-9900 and resistance around the 200-day moving average near parity.
The Canadian dollar gave back some early gains on Friday as global stocks and crude oil prices retreated, with investors looking beyond next week's U.S. presidential vote to the looming U.S. "fiscal cliff". <MKTS/GLOB>
Still, the Canadian dollar outperformed on the crosses, strengthening to a one-week high against the Australian dollar and a more than two-week high against the euro.
Data showed the Canadian job market stalled in October after two months of strong hiring, confirming expectations that employment gains would ease to reflect sluggish economic growth.
"After the strong gains that we saw over the last couple of months, it's not too surprising to find the Canadian labor market take a bit of a breather," said David Tulk, chief Canada macro strategist at TD Securities.
"It's consistent with growth slowing into Q3 and then recovering slowly thereafter," Tulk said.
The Canadian economy shrank in August for the first time in six months, an unexpected contraction that pointed to a sharp slowdown in third-quarter growth.
The price of Canadian government debt turned higher, climbing across the yield curve and outperforming U.S. Treasuries. <US/>
The two-year bond rose 2 Canadian cents to yield 1.069 percent, and the benchmark 10-year bond gained 13 Canadian cents to yield 1.773 percent.
Editing by Peter Galloway