CANADA FX DEBT-C$ closes little changed, eye on EU bank aid talks

Fri Jun 8, 2012 4:58pm EDT
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* C$ ends session at C$1.0270, or 97.37 U.S.
    * Briefly weakens after jobs data before recovering
    * Traders cautious ahead of Spain conference call
    * Bond prices mostly higher or little changed

    By Allison Martell	
    TORONTO, June 8 (Reuters) - Canada's dollar closed slightly
firmer on Friday, with traders shrugging off tepid domestic jobs
data and focusing on upcoming efforts by European policymakers
to plan a rescue for Spain's troubled banking sector.	
    Senior European Union and German officials said the single
currency bloc's deputy finance ministers would hold a conference
call on Saturday morning to discuss Spain's request for an aid
package for its ailing banks. 	
    "The market is still a little bit unsure about what's coming
down next after this week's trade," said Steve Butler, director
of foreign exchange trading at Scotiabank.	
    Butler said the market was nervous about what might happen
with Spain over the weekend. Concerns include who might be able
to provide a bailout, and whether the IMF will have to be
    "Spain is still a pretty big unknown, because we don't know
exactly what the ask is," said Mark Frey, chief market
strategist at Cambridge Mercantile Group. "We don't know what
the dollar value is of what we're looking at, and how it's going
to be funded."	
    Concerns about Europe's debt crisis overshadowed Canadian
employment data that typically sets the direction of the
currency. The report showed Canada's jobs bonanza came to an
abrupt halt in May, with a negligible employment gain of 7,700
new hires. 	
    Still, the weaker-than-forecast report brought more relief
than trepidation to jittery investors, who saw it as evidence
the recovery is intact despite a worsening global backdrop.	
    "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.	
    Following the data releases, the currency briefly
touched a session low of C$1.0358, but quickly recovered to
trade at the same level it was at before the report.	
    Canada's dollar closed at C$1.0270, or 97.37 U.S. cents,
barely changed from Thursday's close at C$1.0279 or 97.29 U.S.
    Porter said he thought the one month of data would not
affect the longer-term outlook for the Bank of Canada's monetary
    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. 	
    Canadian bond prices were mostly higher or little changed.
The two-year bond rose 10 Canadian cents to yield
1.041 percent, while the benchmark 10-year bond was
flat, yielding 1.814 percent.