OTTAWA: The Canadian dollar strengthened against its U.S. counterpart on Friday as oil prices rose and domestic jobs surged but still ended the week lower. Canada added 48,300 jobs in January, Statistics Canada said, as hiring in the service sector helped the labor market build on its momentum from the latter part of 2016. “It’s another impressive read,” said Desjardins Senior Economist Jimmy Jean. He said the Bank of Canada would remain concerned about the quality of job creation and the number of hours worked but would be happy with the employment market’s expansion. The implied probability of a Bank of Canada interest rate hike by the end of the year rose to more than 40 per cent. It was just 22 per cent on Thursday morning before U.S. President Donald Trump’s promise of a “phenomenal” tax plan in the next few weeks, which lifted bond yields.
“The market is mispricing the risks around the Bank of Canada,” said Ian Gordon, FX strategist at Bank of America Merrill Lynch. “Their main concern is whether you continue to see a tightening in financial conditions driven by what’s happening in the U.S.” U.S. crude prices settled 86 cents higher at $53.86 a barrel after reports that Organization of the Petroleum Exporting Countries members delivered more than 90 per cent of the output cuts they pledged in a landmark deal that took effect in January.