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The Canadian dollar strengthened to a four-week high against its U.S. counterpart on Friday after domestic data showing a much bigger-than-expected jobs gain in September supported bets for the Bank of Canada to keep interest rates on hold this month.

The Canadian economy added 53,700 jobs in September, the second straight month of robust jobs gains, Statistics Canada data showed. Analysts had forecast a gain of 10,000 jobs

Chances of a Bank of Canada interest rate cut at the October 30 policy decision dipped to 7 per cent from 9 per cent before the data, the overnight index swaps market indicated.

The central bank has kept its benchmark rate on hold at 1.75 per cent this year even as other central banks, including the Federal Reserve and the European Central Bank, have eased.

At 9:03 a.m. (1303 GMT), the Canadian dollar was trading 0.6 per cent higher at 1.3218 to the greenback, or 75.65 U.S. cents. The currency touched its strongest intraday level since Sept. 12 at 1.3206.

Rising investor hopes for a partial trade deal between the United States and China, as top negotiators from the two countries geared up to meet for a second day of talks, added to support for the loonie.

Canada is a major exporter of commodities, including oil, so its economy could benefit from reduced trade uncertainty.

Oil prices climbed after Iranian media said a state-owned oil tanker had been struck by missiles in the Red Sea near Saudi Arabia, but bearish oil demand forecasts soon pulled crude off session highs. U.S. crude oil futures were up 1.20 per cent at $54.19 a barrel.

Canadian government bond prices fell across the yield curve, with the two-year price down 15 Canadian cents to yield 1.63 per cent and the 10-year falling 75 Canadian cents to yield 1.492 per cent.

Canada’s 2-year yield climbed 3.2 basis points further above its U.S. equivalent to a spread of 4.5 basis points, the biggest gap in favor of the Canadian bond since October 2017.

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