CANADA FX DEBT-Surprise jobs gain helps Canadian dollar hold on to weekly move higher

By Fergal Smith

TORONTO, June 6 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday but was holding on to a weekly gain, as stronger-than-expected domestic jobs data bolstered expectations the Bank of Canada would keep rates on hold next month.

The loonie CAD= was trading nearly 0.1% lower at 1.3685 per U.S. dollar, or 73.07 U.S. cents, after moving in a range of 1.3661 to 1.3704. On Thursday, the currency touched an eight-month high at 1.3632, while it was on track for a weekly gain of 0.4%.

Canada's economy added 8,800 jobs last month, compared to an expected decline of 12,500. The unemployment rate, however, climbed to 7%, its highest level in almost nine years, excluding the peak of the COVID-19 pandemic.

"A lot of part-time jobs were lost and they became full-time jobs. Net-net I think it's a good thing," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC.

"It's also clear that the Bank of Canada is not going to be in a hurry to cut rates again. There still might be another rate cut coming but later this year."

Investors see a 73% chance the BoC keeps its benchmark interest rate on hold at 2.75% in July, up from 67% before the data. On Wednesday, the central bank refrained from cutting rates for a second straight meeting, citing the need to study the effects of U.S. trade policy.

U.S. jobs data was also stronger than expected, which boosted the U.S. dollar against a basket of major currencies.

The price of oil, one of Canada's major exports, rose on optimism about U.S.-China trade talks. U.S. crude oil futures CLc1 traded nearly 2% higher at $64.62 a barrel.

Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 7.2 basis points at 3.327%, trading at its highest level since May 26.