CANADA FX DEBT-C$ strengthens as oil prices rise, domestic jobs surge
* Canadian dollar at C$1.3085, or 76.42 U.S. cents * Loonie touches its strongest since Monday at C$1.3067 * Bond prices lower across the yield curve By Fergal Smith TORONTO, Feb 10 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and a surge in domestic jobs added to the risk that the Bank of Canada will raise interest rates as soon as this year. Canada added 48,300 jobs in January, Statistics Canada said, as hiring in the service sector helped the labor market build on its momentum from the latter part of 2016. Economists had expected no gain in jobs. "It's another impressive read," said Desjardins Senior Economist Jimmy Jean. " ... I don't recall such a steady sequence for job creation. He said the Bank of Canada would remain concerned about the quality of job creation and the number of hours worked but would be happy with the employment market's expansion. The implied probability of a Bank of Canada interest rate hike by the end of the year rose to nearly 50 percent from less than 40 percent before the jobs report, data from the overnight index swaps market showed. U.S. crude prices were up 1.77 percent at $53.94 a barrel after reports that Organization of the Petroleum Exporting Countries members delivered more than 90 percent of the output cuts they pledged in a landmark deal that took effect in January. Oil is one of Canada's major exports. At 9:27 a.m. ET (1427 GMT), the Canadian dollar was trading at C$1.3085 to the greenback, or 76.42 U.S. cents, stronger than Thursday's close of C$1.3141, or 76.10 U.S. cents. The currency's weakest level of the session was C$1.3158, while it touched its strongest since Monday at C$1.3067. Gains for the Canadian dollar came even as the greenback strengthened against a basket of major currencies ahead of a meeting of U.S. and Japanese leaders. U.S. President Donald Trump's promise on Thursday of a major tax reform plan has put the focus back on efforts to boost economic growth, reinvigorating U.S. dollar bulls. Canadian government bond prices were lower across the yield curve, with the two-year price down 8 Canadian cents to yield 0.793 percent and the 10-year falling 32 Canadian cents to yield 1.717 percent. The spread between Canada's 2-year yield and its U.S. equivalent narrowed by 2.9 basis points to -40.5 basis points as Canadian government bonds underperformed on the strong jobs data. (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
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