By Chris Fournier Dec. 4 (Bloomberg) -- Canada’s dollar rose for the first time in three days after a government report showed employers added more jobs last month than economists forecast, adding to speculation the central bank will raise interest rates. Canada’s dollar, nicknamed the loonie for the aquatic bird on the one-dollar coin, was the best performer against the greenback among the 16 most-traded currencies tracked by Bloomberg. “The economic side of the equation is positive for the Canadian dollar,” said George Davis, chief technical analyst for fixed-income and currency strategy in Toronto at Royal Bank of Canada, the nation’s largest lender. “Even though oil has come off a little bit in the last week or so, it’s still fairly resilient, close to $77 a barrel.” The Canadian currency appreciated 0.6 percent to C$1.0515 per U.S. dollar at 12:01 p.m. in Toronto, from C$1.0574 yesterday. It advanced as much as 1.3 percent and is headed for weekly gain of 1 percent. One Canadian dollar equals 95.12 U.S. cents. The economy added 79,100 jobs after shedding 43,200 in October, Statistics Canada said today in Ottawa. The median forecast of 20 economists in a Bloomberg survey was for an increase of 15,000. Canada’s unemployment rate fell to 8.5 percent, from 8.6 percent in October. Rate Expectations Traders raised bets on future rate increases after the employment reports. The yield on the overnight index swap due in nine months, based on predictions for the Bank of Canada’s rate at that time, climbed to 0.36 percent, the highest in more than a month, from 0.33 percent yesterday. “The employment report was much better than anyone anticipated today, which certainly gave a boost to the Canadian dollar,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia, Canada’s third- largest lender. “We have moved back to a pretty important level in the exchange rate at 1.045. We’re just above it now.” Government bonds fell, driving the 10-year note’s yield higher by eight basis points, or 0.08 percentage point, to 3.32 percent. The price of the 3.75 percent security maturing in June 2019 dropped 70 cents to C$103.47. Bank of Canada policy makers left the overnight lending rate at a record low 0.25 percent at their last meeting in October and reiterated a pledge to hold it there through June 2010, barring a change in the inflation outlook. The rate was 4.5 percent when the bank began cutting it in December 2007. The next policy meeting is scheduled for Dec. 8. ‘Winding It Down’ The Canadian currency briefly extended gains after a Labor Department report showed the U.S. economy cut 11,000 jobs, versus a median forecast in a Bloomberg survey that called for cuts of 125,000. “There’s good U.S. dollar buyers down at the bottom of the range, around C$1.04,” said John Curran, a Toronto-based senior vice president at CanadianForex Ltd., an online foreign-exchange dealer. “We’re getting into thin year-end markets. People are just going to want to start winding it down.” Traders are betting on which countries will be the first to raise interest rates as the global economy shows signs of emerging from the worst recession in more than half a century. Investors tend to favor the currencies of nations whose borrowing costs are rising because yields are higher. Crude oil for January delivery dropped 12 cents to $76.34 a barrel on the New York Mercantile Exchange. Crude is Canada’s biggest export. To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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