Canadian dollar heads for weekly decline as jobless rate climbs
TORONTO, May 9 (Reuters) - The Canadian dollar weakened to a three-week low against its U.S. counterpart on Friday as signs that trade tensions are hurting employment bolstered expectations for additional interest rate cuts from the Bank of Canada.
The loonie was trading 0.1% lower at 1.3935 per U.S. dollar, or 71.74 U.S. cents, after touching its weakest intraday level since April 16 at 1.3944.
For the week, the loonie was down 0.8%, with the currency pulling back from a near seven-month high on Tuesday at 1.3748.
Canada's unemployment rate rose to 6.9% in April, the highest level since November and above the 6.8% rate economists had expected, as the economy added just 7,400 jobs.
"Tariff uncertainty is now weighing on employment, and we see little chance these worries will fade in the near future," said Nick Rees, senior FX market analyst at Monex Europe Ltd.
"We see little reason that this jobs data should stand in the way of further BoC policy easing in June, and that leaves loonie risks skewed to the downside as traders price this in."
Investors see a roughly 60% chance that the BoC resumes cutting interest rates at its next policy decision on June 4, up from 46% before the employment report, overnight index swaps market data showed.
The central bank left its benchmark rate on hold at 2.75% last month, its first pause since the easing campaign began in June.
The U.S. dollar (.DXY), opens new tab was set for a weekly gain against a basket of major currencies on optimism about upcoming U.S.-China talks.
Signs that trade tensions could be easing between China and the United States helped support the price of oil, one of Canada's major exports. U.S. crude futures were trading 1.5% higher at $60.82 a barrel.
Canadian bond yields eased across the curve, with the 10-year down 4.7 basis points at 3.157%.
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