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Canadian Dollar Hits Three-Week High on Stronger-Than-Expected Jobs Report
The Canadian dollar strengthened to its highest level in three weeks against the U.S. dollar on Friday, propelled by a surprisingly robust domestic jobs report for June. The data suggested continued economic momentum, potentially giving the Bank of Canada more reason to maintain its current monetary policy stance.
Jobs Data Exceeds Forecasts
Canada's economy added a net 18,200 jobs in June, significantly outpacing analyst estimates of 10,000, according to the employment data. The unemployment rate also declined to 6.5%, indicating a resilient labor market despite ongoing trade uncertainties.
Following the release, the loonie appreciated against the greenback:
- It traded 0.3% higher at 1.4125 per U.S. dollar, or 70.80 U.S. cents.
- The move marked its strongest level since June 19.
- For the week, the currency gained 0.5%, ending a five-week streak of declines.
AdEconomic Outlook and Central Bank Policy
The strong labor market figures provide further evidence that Canada's economy rebounded in the second quarter after contracting for two consecutive quarters. The report follows data from earlier in the week showing that Canadian exports rose for the fourth straight month in May.
A recent Reuters poll indicated that economists expect the Bank of Canada to hold its benchmark overnight rate at 2.25% at its upcoming decision on July 15 and maintain that level well into next year. Friday's positive employment data reinforces this view, as a strengthening economy reduces the pressure on the central bank to consider rate cuts.