Canada shed 63,000 jobs in December, a bigger decline than was expected, Statistics Canada data showed, as more restrictions were imposed, aimed at curbing a second wave of coronavirus infections.
"In the near term, the lockdowns will challenge the economy, likely spurring calls for more fiscal stimulus and keeping the BoC on an accommodative path," said Ryan Brecht, a senior economist at Action Economics.
The Bank of Canada has cut interest rates to a record low of 0.25%. In November, the central bank said it could lower interest rates further without going negative if the second wave weakens the economy. Its next policy decision is due on Jan. 20.
The Canadian dollar was trading 0.2% lower at 1.2707 to the greenback, or 78.70 U.S. cents, having traded in a range of 1.2658 to 1.2743. It was up 0.2% for the week, helped by an 11-month high for oil, one of Canada's major exports.
On Wednesday, it touched its strongest in nearly three years at 1.2626.
U.S. crude oil futures settled 2.8% higher at $52.24 a barrel, supported by Saudi Arabia's pledge to cut output, while the U.S. dollar turned higher against a basket of major currencies.[nL1N2JJ2EF}
A dismal December U.S. payrolls raised expectations for further stimulus measures to prop up an economy battered by the coronavirus but a report that Democratic U.S. Senator Joe Manchin opposed bigger direct checks capped gains on Wall Street.
Canadian government bond yields rose across a steeper curve, with the 10-year up 1.7 basis points at 0.811%. It touched its highest intraday level since April 9 at 0.815%.
(Reporting by Fergal Smith; editing by Barbara Lewis and David Gregorio)
By Fergal Smith
