Canadian dollar strengthens to one-week high as Fed rate hike bets tumble

Fri Jun 3, 2016 4:39pm EDT
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By Fergal Smith

TORONTO (Reuters) - The Canadian dollar strengthened to a one-week high against its broadly weaker U.S. counterpart on Friday after a slowdown in U.S. jobs growth lowered chances of an interest rate hike by the Federal Reserve, offsetting disappointing domestic data.

The U.S. economy created the fewest number of jobs in more than five years in May, pointing to labor market weakness that could make it difficult for the Fed to raise interest rates.

The Canadian dollar CAD=D4 ended at C$1.2943 to the greenback, or 77.26 U.S. cents, much stronger than Thursday's close of C$1.3105, or 76.31 U.S. cents.

The currency's weakest level of the session was C$1.3105, while it touched its strongest since May 26 at C$1.2916. For the week it rose 0.6 percent.

However, the commodity-linked Canadian dollar lost ground against some other major currencies as oil fell.

Against the Japanese yen CADJPY=R, the loonie hit its lowest since April 8 at 82.19 yen, while U.S. crude oil futures CLc1 settled 55 cents lower at $48.62.

Investors also weighed the impact on Canada's economy if growth in its biggest trading partner falters.

If the U.S. economy does not accelerate as the Bank of Canada expects it will put a rate cut "back on the table" for later this year, said Adam Button, a currency analyst at ForexLive.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch