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The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Friday as signs emerged of easing frictions between the United States and China and domestic data showed a plunge in jobs that was about half the number expected.

Canada lost a record-breaking 2.0 million jobs in April, when non-essential business was halted across the country to help contain the coronavirus pandemic, while the unemployment rate surged to 13.0 per cent, official data showed. Analysts had forecast a loss of 4 million jobs and an unemployment rate of 18 per cent.

“Not as bad a feared, but still a terrible report as the contraction in the job market accelerated in April amid a full month of lockdowns,” said Ryan Brecht, a senior economist at Action Economics.

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The U.S. economy, where Canada sends about 75 per cent of its exports, also lost fewer jobs in April than feared.

Top U.S. and Chinese trade representatives discussed their Phase 1 trade deal, with China saying they agreed to improve the atmosphere for its implementation and the United States saying both sides expected obligations to be met.

Canada runs a current account deficit and is a major producer of commodities, including oil, so the currency tends to be sensitive to the global flow of trade and capital.

U.S. crude prices were up 3.2 per cent at $24.31 a barrel and were on track for a second consecutive week of gains as more countries moved ahead with plans to relax economic and social lockdowns put in place to halt the coronavirus pandemic and as more output was shut in.

The Canadian dollar was trading 0.1 per cent higher at 1.3950 to the greenback, or 71.68 U.S. cents. The currency, which was on track to rise 0.7 per cent for the week, touched its strongest intraday level since May 1 at 1.3922.

Separate data, from the Canadian Mortgage and Housing Corporation (CMHC), showed that Canadian housing starts, excluding the province of Quebec, rose 10.8 per cent in April compared with the previous month.

Canadian government bond yields rose across a steeper curve, with the 10-year yield up 2.8 basis points at 0.577 per cent.

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