Canadian Dollar Surges With Yields Amid ‘Blockbuster’ Jobs Data

(Bloomberg) -- The Canadian dollar surged by the most in more than a month as a stronger-than-expected domestic jobs report lowered expectations for the Bank of Canada to cut interest rates.

Amid a risk-on tone with signs of optimism in U.S.-China trade talks, the loonie gained 0.7% Friday, the second-best performance among Group-of-10 currencies. The employment figures drove the Canadian two-year yield up 10 basis points to 1.64%, leaving it above its U.S. counterpart by close to the biggest gap since 2017.

The “blockbuster” jobs report combined with the improved risk appetite should give the Canadian dollar a bit more lift, said Shaun Osborne, chief foreign-exchange strategist at Scotiabank. The report “makes it hard to justify a rate cut any time soon” by the Bank of Canada.

The economy added 53,700 jobs last month, Statistics Canada said, following a gain of 81,100 in August. The consensus was for an addition of 7,500 jobs. The strong data may bolster expectations that the economy will prove resilient in the face of trade headwinds.

The Canadian dollar traded at C$1.3207, about 0.8% stronger on the week. Its 3.3% gain this year is the biggest among G-10 currencies.

Futures are pricing in a 6% probability of a rate cut at the central bank’s meeting Oct. 30, compared with about 22% at the start of the week.

The data also came on a day when oil spiked on geopolitical concerns in the Middle East, a further boost for the loonie.

To contact the reporter on this story: Susanne Barton in New York at swalker33@bloomberg.net

To contact the editors responsible for this story: Benjamin Purvis at bpurvis@bloomberg.net, Mark Tannenbaum

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