CANADA FX DEBT-C$ little changed as soft US ADP data curbs greenback

Wed Jun 5, 2013 10:07am EDT
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* C$ softens slightly against the greenback
    * U.S. private sector job creation lower than expected in
    * Prospect of Fed slowing stimulus tied to labor market

    By Alastair Sharp
    TORONTO, June 5 (Reuters) - The Canadian dollar was little
changed on Wednesday versus the U.S. dollar as
weaker-than-expected U.S. private sector hiring restrained the
greenback's strength, as it is seen reducing the prospect of the
Federal Reserve changing its monetary stimulus stance any time
     The moderate pace of hiring seen in May's U.S. ADP report
of 135,000 new private sector jobs may not be enough to persuade
the Fed to soon pare back its monthly purchases of $85 billion
dollars of bonds.
     The Fed's bond buying aims to keep U.S. interest rates low,
thus making the dollar less alluring for investors seeking
higher returns on deposits elsewhere.    
     The Canadian currency weakened considerably last month as 
robust U.S. economic data bolstered the view that the Fed would
rein in its bond buying in the coming months. 
     At 9:53 a.m. (1353 GMT) the Canadian dollar was
trading at C$1.0353 to the greenback, or 96.59 U.S. cents,
nearly 0.1 percent lower, as compared with C$1.0344, or 96.67
U.S. cents, at Tuesday's North American close. 
     "Markets are all about U.S. dollar direction at the moment.
Even dollar/yen is more dollar than it is yen," said Adam Cole,
global head of currency strategy at Royal Bank of Canada. "When
that's the case, the Canadian dollar tends to be relatively
    Jobs reports for both the United States and Canada are due
on Friday, with the U.S. print more closely watched given the
Fed has explicitly linked policy direction to the health of the
jobs market.
    After in recent months acting as a safe haven amid global
economic uncertainty, the greenback is now strengthening in
relation to stronger data and falling back on weaker numbers.
    "Now that you've got some movement in expectation of Fed
policy expectations, it's more like a conventional world where
good news is good news rather than good news is bad news," RBC's
Cole said.
    A series of Reuters polls released on Wednesday showed that
the greenback is seen extending its gains against a string of
major currencies including the euro, pound sterling and yen,
while the Canadian dollar is expected to hold steady.
    Canadian government debt prices were higher across the
curve, with the two-year bond up 2 Canadian cents to
yield 1.056 percent, while the benchmark 10-year bond
 rose 19 Canadian cents to yield 2.063 percent.