C$ hits 2-week low as jobs data fuels oversized rate cut bets
Canadian dollar falls 0.5% against the greenback
Touches its weakest since Aug. 23 at 1.3571
Canada's unemployment rate rises to 6.6%
2-year yield hits a 2-year low at 3.028%
By Fergal Smith
TORONTO, Sept 6 (Reuters) -The Canadian dollar weakened to a two-week low against its U.S. counterpart on Friday as oil prices fell and investors weighed prospects of domestic jobs data triggering a faster pace of interest rate cuts by the Bank of Canada.
The loonie CAD= was trading 0.5% lower at 1.3571 to the U.S. dollar, or 73.69 U.S. cents, its weakest level since Aug. 23. For the week, the currency was down 0.6%.
Canada's economy added 22,100 jobs in August but the pace of hiring was not fast enough to stop the unemployment rate climbing to 6.6%, its highest level in seven years excluding the pandemic years of 2020 and 2021.
"We're still on track for back-to-back rate cuts going into the last two meetings of the year and also (we'll) watch the growth numbers and whether that means we're going to actually take a faster pace," said Amo Sahota, director at Klarity FX in San Francisco.
The overnight index swaps market was pricing in 63 basis points of easing in total at the BoC's final two meetings of the year, up from 59 basis points before the jobs data. 0#BOCWATCH
It indicates an increased chance the central bank will opt for an oversized half-percentage-point reduction, rather than a quarter-percentage-point move, at one of those decisions.
U.S. data showed that employment increased less than expected in August, but a drop in the jobless rate to 4.2% suggested an orderly labor market slowdown continued and probably did not warrant a big rate cut from the Federal Reserve this month.
The price of oil CLc1, one of Canada's major exports, fell 1.9% to $67.86 a barrel, extending its recent declines,
Canadian bond yields fell across a steeper curve. The 2-year CA2YT=RR was down 6.8 basis points at 3.069%, after earlier touching its lowest level since August 2022 at 3.028%.
Reporting by Fergal Smith; editing by Jonathan Oatis
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