CANADA FX DEBT-C$ remains weaker after Canadian jobs data

Fri Jun 8, 2012 9:54am EDT
 
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* C$ at C$1.0337, or 96.74 U.S. cents
    * Briefly weakens, then little changed after jobs data
    * Bond prices mostly higher

    By Allison Martell	
    TORONTO, June 8 (Reuters) - Canada's dollar weakened against
the U.S. currency on Friday, hurt by fears about global growth
and Europe's debt crisis, with data showing the Canadian economy
created fewer jobs than expected and a surprise trade deficit
signaling tepid domestic demand.	
    Canada's unemployment rate held steady in May as the economy
created a negligible 7,700 jobs, snapping a two-month hiring
spree that yielded the biggest employment gains in three
decades. 	
    "While the details are slightly disappointing, the fact that
Canada is still churning out job gains is the big story here, so
I don't see why this would have any lasting impact on the
Canadian dollar," said Doug Porter, deputy chief economist at
BMO Capital Markets.	
    Porter said he thought the one month of data would not
affect the longer-term outlook for the Bank of Canada's monetary
policy.	
    Trade data released with the jobs number did nothing to
support the currency. The report showed a surprise trade
deficit, Canada's first in six months. 	
    Following the data releases, the currency briefly
touched a session low of C$1.0358.	
    But by 9:48 a.m. (1348 GMT) it was trading at C$1.0337, or
96.74 U.S. cents, compared with around C$1.0339 heading into the
report.	
    The currency was weaker than Thursday's close at C$1.0279 or
97.29 U.S. cents.	
    Since data last week showed weak U.S. job creation in May,
there has been rising speculation of more stimulus measures from
global central banks. The Bank of Canada joined the European
Central Bank in holding rates on Tuesday, but the tone of its
statement signaled that its next move would be a rate hike.
 	
    The lack of a clear signal on Thursday from U.S. Federal
Reserve Chairman Ben Bernanke that the central bank's June 19-20
meeting would bring in a new round of quantitative easing
overshadowed what had been a positive reaction in world markets
to a surprise Chinese interest rate cut.	
    Markets also worried about how Madrid can solve the crisis
at many of its banks caused by a property crash and recession, a
job complicated by Fitch's announcement on Thursday that it cut
Spain's sovereign credit rating by three notches to BBB from A.	
    European Union and German sources said Spain was set to
request European aid for its banks this weekend to forestall
worsening market turmoil, making it the fourth and largest
country to seek assistance since the euro zone debt crisis
began. 	
    Canadian bond prices were mostly higher. The two-year bond
 rose 8 Canadian cents to yield 1.011 percent, while
the benchmark 10-year bond climbed 67 Canadian cents
to yield 1.744 percent.