The Canadian dollar finished flat against the greenback on Friday, but rose against other major currencies, as a strong US jobs report boosted expectations for a Bank of Canada rate hike next week.
Bond prices plunged as growing certainty of a rate increase on Wednesday made their fixed yields less attractive to investors. The domestic currency finished at C$1.2999to the US dollar or 76.93 US cents, little changed from C$1.2997, or 76.94 US cents, at Thursday's close.
The Canadian dollar weakened in the session but then steadily clawed back up after the US Labour Department said nonfarm payrolls rose 144,000 in August, almost matching analysts' forecasts of 150,000.
July's gain was revised up to 73,000 from 32,000. The unemployment rate dipped to 5.4 percent from 5.5 percent. "I think in the back of the market's mind there was still a little bit of uncertainty as to whether the Bank of Canada would be looking to tighten rates next week," said George Davis, chief technical analyst at RBC Capital Markets.
"I think, if anything, the nonfarm number just made the market a little bit more certain of the fact that the bank probably will tighten rates next on Wednesday." The news pushed both the Canadian and US dollars up against other major currencies and helped the Canadian dollar stay close to the seven-month highs it hit two weeks ago.