The

Canadian dollar

on Friday rose past 72 cents U.S. for the first time since late September after

surprise labour numbers

further solidified the market’s belief that the

Bank of Canada

will hold

interest rates

at its next meeting.

The Canadian economy gained 54,000 positions in November, Statistics Canada said on Friday,

blowing away estimates for a loss of 2,500 jobs, while the unemployment rate fell to 6.5 per cent from 6.9 per cent instead of rising to seven per cent as economists expected.

The Canadian dollar jumped 0.83 per cent to 72.23 cents U.S. on Friday afternoon from Thursday’s close of 71.64 cents U.S. in response to the better-than-expected numbers.

“The (Canadian dollar) is rounding out the week on a strong note after another surprisingly robust Canadian jobs report,” Shaun Osborne and Eric Theoret at Scotiabank Global Banking and Markets said in a note.

They said the headline jobs number looked a little weaker under the surface since all the gains came from part-time positions in November, while full-time positions fell.

However, Osborne and Theoret said the drop in the

unemployment rate

and “sticky” growth in

wages

have boosted bets for an interest rate hike by the end of 2026.

“All told, there seems grounds to expect the (Canadian dollar) to run higher to extend a little more,” they said. “The caveat here is that December seasonals are not always kind to the (Canadian dollar), although they are quite consistently unkind to the U.S. dollar index.”

For the coming week, they expect the loonie to land somewhere in the range of 72.7 cents U.S. to 71.6 cents U.S.

Interest rate decisions next week by the Bank of Canada and the

United States Federal Reserve

will also set out a path for the loonie.

The Bank of Canada is expected to hold rates at 2.25 per cent, the low end of its neutral range, on Dec. 10, while markets have priced in a cut of 25 basis points by the Fed to bring its rate to 3.75 per cent.

A narrowing differential between Canadian and U.S. rates is typically more friendly to the loonie.

However, there is a little less clarity on what central banks will do in 2026.

Markets are betting the next Fed cut won’t come until spring, though it’s possible more cuts could come sooner.

“But a hawkish (Bank of Canada) hold versus a possibly more dovish-than-expected Fed could drive some additional spread compression and give the (Canadian dollar) an additional lift,” Osborne and Theoret said.

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• Email: gmvsuhanic@postmedia.com