The Canadian dollar strengthened against its U.S. counterpart on Friday, adding to this week's gains, as oil prices rose and data showed Canada's economy adding jobs for the first time in four months. "It is a bit of a relief to see a plus sign in front of the jobs number," said Doug Porter, chief economist at BMO Capital Markets. Money markets stuck with bets for the Bank of Canada to hike interest rates by a further 50 basis points at its next policy announcement on Oct. 26, with investors expecting rates to peak at about 4.25% in the coming months.
The Canadian dollar is set to fall short of a September forecast for the coming year following sharp losses in recent weeks and as interest rate hikes by the Bank of Canada threaten to push the domestic economy into recession, a Reuters poll showed. The currency has weakened around 7% against the U.S. dollar since the start of 2022, but has fared better than other G10 currencies except for the Swiss franc, although most of that decline has come since mid-August. Last Friday, it touched its weakest level in more than two years at 1.3838 per U.S. dollar, or 72.26 U.S. cents.
Watch: Karl Schamotta expects the loonie to head toward 70 cents