CANADA FX DEBT-C$ rallies nearly a cent on robust domestic jobs report

Fri Nov 7, 2014 4:33pm EST
 
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(Adds comment, details, closing figures)
    * Canadian dollar at C$1.1333 or 88.24 U.S. cents
    * Bond prices generally higher

    By Solarina Ho
    TORONTO, Nov 7 (Reuters) - The Canadian dollar strengthened
by nearly a cent against its U.S. counterpart on Friday,
encouraged by a surprisingly robust domestic jobs report for
October that hinted the Canadian economy may be healthier than
thought.
    Canada added 43,100 jobs in October, and the unemployment
rate dropped to a nearly six-year low of 6.5 percent, 
Statistics Canada said. Analysts had expected a loss of 5,000
jobs on the heels of September's big 74,100 gain.
 
    "The loonie is obviously shining well today on the positive
jobs data. It strongly beat expectation pretty much all across
the board," said Rahim Madhavji, president of
KnightsbridgeFX.com.
    The currency had been trading close to its weakest level in
five years in recent sessions, partly due to a gloomier and more
dovish tone adopted by Canada's central bank.
    "The Bank of Canada has pretty much been gutting the loonie
over the last couple of weeks, so I think it changes a little
bit of the sentiment ... it reminds people that Canada perhaps
isn't doing as badly," said Madhavji, who expected the currency
to oscillate around the C$1.13 level against the greenback in
the near term.
    The Canadian dollar, which outperformed most of its
currency peers on Friday, finished the session at C$1.1333 to
the U.S. dollar, or 88.24 U.S. cents, sharply higher than
Thursday's close of C$1.1426, or 87.52 U.S. cents. 
    "I still think (the Bank of Canada) is on the sidelines for
a good while ... But this report certainly will tone down the
dovish rhetoric coming out of the bank," said Sal Guatieri,
senior economist at BMO Capital Markets.
    The U.S. labor market also grew at a brisk pace in October,
adding 214,000 new jobs, and the unemployment rate fell to a
six-year low of 5.8 percent, underscoring the resilience of the
world's largest economy in the face of slowing global demand. 
 
    Canadian government bond prices were generally higher across
the maturity curve, with the two-year up 1.5 Canadian
cents to yield 1.021 percent and the benchmark 10-year
 rising 49 Canadian cents to yield 2.030 percent.

 (Additional reporting by Alastair Sharp; Editing by Peter
Galloway)