Loonie Climbs As Robust Canadian Jobs Data Backs Rate Hike Hopes

The Canadian dollar climbed against its key counterparts in the early New York session on Friday, as upbeat Canadian jobs data for June raised the possibility of a Bank of Canada rate hike next week.

Data from Statistics Canada showed that Canadian economy added 45,300 jobs in June, after an increase of 55,000 jobs in May.

Economists had forecast a job growth of 10,000.

The unemployment rate was 6.5 percent, down 0.1 percentage points from 6.6 percent last month. The rate was expected to be unchanged.

Strong jobs report ramped up bets for a rate increase by the Bank of Canada when it meets next week.

The loonie fell against its most major rivals in the Asian session amid risk aversion and falling oil prices.

Extending early gains, the loonie spiked up to a 6-month high of 88.36 against the Japanese yen, from a low of 87.13 hit at 5:00 pm ET. The loonie is poised to find resistance around the 90.00 area.

Preliminary data from the Cabinet Office showed that Japan's leading index strengthened in May, while coincident index fell from April.

The leading index that measures the future economic activity, rose to 104.7 in May from 104.2 in April. The score was forecast to rise to 104.6.

Reversing from an early weekly low of 1.4835 against the euro, the loonie firmed to 1.4679. The next possible resistance for the loonie is seen around the 1.43 mark.

Data from Destatis showed that German industrial production grew at the fastest pace in four months in May.

Industrial production grew 1.2 percent month-on-month in May, faster than the 0.4 percent increase seen in April and exceeded economists' forecast of 0.2 percent.

Having dropped to a 2-day low of 1.2994 against the greenback at 1:45 am ET, the loonie strengthened to a 10-month high of 1.2886. Further uptrend may take the loonie to a resistance around the 1.26 level.

Data from the Labor Department showed that U.S. employment increased much more than expected in the month of June.

The report said non-farm payroll employment jumped by 222,000 jobs in June following an upwardly revised increase of 152,000 jobs in May.

Bouncing off from an early 2-day low of 0.9870 against the aussie, the loonie hit a 6-month high of 0.9790. If the loonie continues rally, 0.96 is seen as its next resistance level.

Looking ahead, Canada Ivey PMI for June is due shortly.