June 5, 2015 / 9:13 PM / 2 years ago

CANADA FX-Robust job gains fuel Canadian dollar rebound

(New throughout, updates prices and market activity to close, adds details, CIBC comment)

* Canadian dollar at C$1.2439 or 80.39 U.S. cents

* Bond prices mostly lower across the maturity curve

By Solarina Ho

TORONTO, June 5 (Reuters) - The Canadian dollar rebounded on Friday despite a greenback rally on U.S. employment data, as jobs growth in Canada had its biggest jump in seven months and crude prices saw a late-day surge.

Canadian employers added 58,900 jobs in May, far above the 10,000 jobs economists polled by Reuters had expected.

Still, the report did not alter expectations that the Bank of Canada will likely keep interest rates on hold, economists said.

The Canadian numbers helped the loonie outperform all its currency counterparts. South of the border, U.S. numbers sent the greenback jumping more than 1 percent at one point against a basket of currencies.

“In USD/CAD terms, those gains were stabilized by the even more impressive Canadian numbers we got today,” said Bipan Rai, director of foreign exchange strategy, CIBC World Markets.

The Canadian dollar finished at C$1.2439 to the U.S. dollar, or 80.39 U.S. cents. This was more than half a Canadian cent stronger than the Bank of Canada’s official close of C$1.2504, or 79.97 U.S. cents, on Thursday.

The currency also ended far from the C$1.2563, or 79.60 U.S. cents it touched it touched earlier.

Trading remained rangebound, however, keeping roughly within C$1.2400 to C$1.2550 of the past week and a half.

“Realistically, barring a surprise in crude prices action - we think more clarity on what’s going to happen with the Fed is what’s going to shake us out of these ranges,” Rai said, adding that there was still a sizeable bias to be net short on the Canadian dollar.

U.S. job growth accelerated sharply in May, rising by 280,000, signaling momentum in the economy and bolstering prospects of a U.S. Federal Reserve interest rate hike this year.

“It would be very tough for the Bank of Canada to be cutting interest rates in an environment where the Fed is seriously considering raising rates,” said Doug Porter, chief economist at BMO Capital Markets.

U.S. dollar-denominated crude, a key Canadian export, also rose. Brent settled up $1.28, or 2.1 percent, at $63.31 a barrel. U.S. crude jumped $1.13, or almost 2 percent, to settle at $59.13.

Canadian government bond prices were lower across the maturity curve. The two-year price was down 12 Canadian cents to yield 0.638 percent while the benchmark 10-year fell 82 Canadian cents to yield 1.827 percent.

The Canada-U.S. two-year bond spread was -7.9 basis points, while the 10-year spread was -58.1 basis points. (Additional reporting by Allison Martell; Editing by Peter Galloway and David Gregorio)

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