CANADA FX DEBT-C$ ends stronger after strong employment gains

Fri May 11, 2012 4:43pm EDT
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* C$ ends slightly higher as job gains offset by global woes

* Canada adds 58,200 jobs in April

* Unexpectedly strong data boosts rate hike bets

* Bond yields jump at short end, underperform Treasuries

By Andrea Hopkins

TORONTO, May 11 (Reuters) - The Canadian dollar closed stronger against its U.S. counterpart on Friday after unexpectedly strong Canadian job gains boosted bets on a rate hike, but global woes tempered gains.

Defying market expectations, Canada added 58,200 jobs in April, mostly full-time, after a whopping gain of 82,300 new positions in March.

The data increased expectations that the Bank of Canada could resume tightening monetary policy this year. Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that traders sharply increased bets on a rate hike in the second half.

Higher interest rates tend to strengthen a country's currency by attracting international capital flows.   Continued...