By Fergal Smith
TORONTO (Reuters) - The Canadian dollar weakened to a more-than two-week low against its U.S. counterpart on Friday as geopolitical risk rattled global financial markets, offsetting stronger-than-expected domestic jobs data.
At 9:22 a.m. EDT (1322 GMT), the Canadian dollar
Canada unexpectedly added 54,100 jobs in July and the unemployment rate dipped to equal a record low 5.8 percent.
"Canadian labour markets continue to generate jobs at a pretty good pace that will support growth in the economy," said Paul Ferley, assistant chief economist at Royal Bank of Canada.
But analysts said the data were weaker than they appeared, due to a drop in full-time jobs and slower wage growth. They played down talk of another interest rate hike from the Bank of Canada as soon as next month.
The central bank tightened in July for the fourth time in a year. Its benchmark interest rate is at 1.50 percent.
Chances of a rate hike in September were little changed at about 25 percent after the data, the overnight index swaps market showed.
"The loonie failed to gain momentum from that economic indicator release given the current geopolitical climate." Alfonso Esparza, a senior currency analyst at OANDA, said in a research note.
A plunging Turkish lira rattled global markets due to concerns over the country's economy and a deepening rift with the United States.
Canada exports many commodities and runs a current account deficit so its economy could be hurt if the flow of trade or capital slows.
U.S. crude oil futures
Canadian government bond prices were mixed across the yield curve, with the two-year
The gap between Canada's 2-year yield and its U.S. counterpart narrowed by 3 basis points to a spread of 50.8 basis points in favor of the U.S. bond, its narrowest since May 31.
(Reporting by Fergal Smith; Editing by Nick Zieminski)