TORONTO (Reuters) - The Canadian dollar rallied against the greenback on Friday, clawing back some of its decline this week, as investors cut bets that the Bank of Canada would ease interest rates after domestic data showed a bigger-than-expected jobs rebound in December.
Canada's economy added 35,200 jobs in December, exceeding the gain of 25,000 that economists had forecast, while the unemployment rate fell to 5.6%, official data showed.
Data last month showed jobs declined in November by 71,200, the most for any month since 2009, which raised doubts about the strength of Canada's economy.
Chances of a rate cut by July fell to less than 30% from nearly 40% before the release of the data on Friday, the overnight index swaps market showed.
At 9:25 a.m. (1425 GMT), the Canadian dollar was trading 0.1% higher at 1.3039 to the greenback, or 76.69 U.S. cents. The currency, which on Thursday hit near a two-week low intraday at 1.3104, traded in a range of 1.3029 to 1.3075.
For the week, the loonie was on track to weaken 0.3%.
The price of oil, one of Canada's major exports, added to its decline since Wednesday, when the threat of a wider conflict between the United States and Iran receded. U.S. crude oil futures (CLc1) were down 0.4% at $59.30 a barrel.
Canadian government bond prices were lower across the yield curve, with the two-year (CA2YT=RR) down 6 Canadian cents to yield 1.668% and the 10-year (CA10YT=RR) falling 22 Canadian cents to yield 1.629%.
Canada's 2-year yield rose 2.6 basis points further above the yield on the equivalent U.S. government bond to a spread of 8.8 basis points, after U.S. data showed a weaker-than-expected December jobs gain.