TORONTO (Reuters) - The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Friday after data showed that U.S. employers stepped up hiring in October even as Canadian jobs growth slowed.
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.
“What we’re seeing is a rally in risk-related assets, including the Canadian dollar, because of a better-than-expected U.S. employment reading,” said Doug Porter, deputy chief economist at BMO Capital Markets.
At 9:25 a.m. (1325 GMT) the Canadian dollar was trading at C$0.9944 to the greenback, or $1.0056, despite the U.S. currency itself hitting a near two-month high against a basket of currencies. .DXY
The Canadian dollar closed Thursday’s North American session at C$0.9968, or $1.0032.
The currency at one point hit C$0.9936, its strongest level since October 25.
It also firmed against other major currencies, including the euro, Australian dollar and yen.
The Canadian job market stalled in October after two months of strong hiring, reflecting 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 fell across most of the yield curve, with the two-year bond down 3 Canadian cents to yield 1.089 percent, and the benchmark 10-year bond slipping 15 Canadian cents to yield 1.803 percent.
Editing by Jeffrey Hodgson