Canadian dollar posts biggest weekly gain in 23 months #CanadaFinance

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar strengthened against its U.S. counterpart on Friday, adding to its weekly gain, as stronger-than-expected domestic jobs data kept expectations in check for another Bank of Canada interest rate cut in March.

The loonie was trading 0.1% higher at 1.4288 per U.S. dollar, or 69.99 U.S. cents, after moving in a range of 1.4274 to 1.4345.

For the week, the currency was up 1.7%, its biggest weekly advance since March 2023, after Canada escaped the immediate implementation of U.S. trade tariffs.

Canada’s economy added 76,000 jobs in January, eclipsing expectations for a gain of 25,000, and the unemployment rate unexpectedly dipped to 6.6%.

“On paper, this lowers the odds of the Bank of Canada cutting interest rates again at its March meeting,” Thomas Ryan, North America economist at Capital Economics, said in a note.

“But, with tariffs still scheduled to take effect next month, we remain of the view the Bank will err on the dovish side of caution and reduce the policy rate by a further 25 bp (basis points).”

Investors see a 62% chance the Canadian central bank will ease in March, down from 64% before the data.

BoC Governor Tiff Macklem said on Thursday that the threat of tariffs is already affecting business and household confidence.

Among Group of Ten currencies, only the Canadian dollar and the yen strengthened against the U.S. dollar. A slowdown in U.S. job growth likely gives the U.S. Federal Reserve cover to hold off cutting interest rates until at least June.

The price of oil, one of Canada’s major exports, settled 0.55% higher at $71 a barrel, clawing back some of its recent losses.

Canadian bond yields moved higher across the curve. The 10-year was up 11.6 basis points at 3.077%.

(Reporting by Fergal Smith; Editing by Paul Simao and Rod Nickel)