Canadian dollar weakens against stronger U.S. dollar

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Canadian dollar weakens against stronger U.S. dollar

The Canadian dollar weakened against its broadly stronger U.S. counterpart on Friday as investors weighed the U.S. and Canadian jobs data for its impact on the pace of central bank interest rate hikes.

The loonie was trading 0.2% lower at 1.3455 to the greenback, or 74.32 U.S. cents, after trading in a range of 1.3421 to 1.3520. It was on track to decline by 0.6% for the week.

In November, Canada added 10,100 jobs, which was in line with the projected gain of 5,000, while the unemployment rate fell to 5.1%, according to Statistics Canada.

Money markets expect the Bank of Canada to raise interest rates by 25 basis points next Wednesday, with a roughly 15% chance of a larger move.

It's not much different from before the data but the terminal rate, or the endpoint for rate hikes, seen over the coming months climbed to 4.36% from 4.22% after stronger than expected U.S. jobs data that could complicate the Federal Reserve's intention to slow the pace of tightening this month.

The U.S. dollar rallied against a basket of major currencies and equity markets that fell.

The price of oil, one of Canada's major exports, went up on Sunday ahead of a meeting of the Organization of the Petroleum Exporting Countries and its allies OPEC and an EU ban on Monday on Russian crude. U.S. crude prices were up 0.4% at $81.51 a barrel.

Canadian government bond yields went up as a result of the move in U.S. Treasuries. The 10 year was up 5.5 basis points to 2.889%.