TORONTO: The Canadian dollar strengthened against its US counterpart on Friday as signs of an easing in tensions between the United States and China boosted investor sentiment and data showed the Canadian economy adding jobs in August.

Canada added 90,200 jobs in August, while the unemployment rate dropped to 7.1%, its lowest point since the onset of the coronavirus pandemic.

The data could support another taper by the Bank of Canada of its bond purchases as soon as next month despite disappointing figures for hours worked, analysts said.

On Thursday, BoC Governor Tiff Macklem said the Canadian economy is moving closer to the point where the central bank will no longer need to continue adding stimulus through its quantitative easing program.

A phone call between US President Joe Biden and Chinese leader Xi Jinping, their first talks in seven months, helped boost stock markets globally and the price of oil, one of Canada's major exports.

US crude prices rose 2.3% to $69.72 a barrel, while the Canadian dollar was trading 0.6% higher at 1.2592 to the greenback, or 79.42 US cents.

Dollar dips on stronger risk appetite after US, China call

For the week, the currency was on track to fall 0.5% as investors worried that global economic recovery is losing momentum.

Meanwhile, polls show Canadian Prime Minister Justin Trudeau in a tough battle to win a Sept. 20 election. On Thursday, he used a key leaders' debate to take aim at his main rival, portraying him as weak and ineffective.

Canadian government bond yields were higher across a steeper curve, with the 10-year up 3.1 basis points at 1.207%.