CANADA FX DEBT-C$ weakens as strong U.S. jobs figures signal Fed rate rise

Fri Feb 6, 2015 9:58am EST
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* C$ at C$1.2465, or 80.22 U.S. cents
    * Bond prices lower across the curve

    By Alastair Sharp
    TORONTO, Feb 6 (Reuters) - The Canadian dollar 
weakened slightly on Friday after both Canada and the United
States released monthly employment data for January.
    Both headline figures were strong, but the gain of 257,000
jobs in the United States, as well as rising wages there, left
traders adding to bets that the U.S. Federal Reserve will begin
raising interest rates by midyear. 
    In Canada, rates are expected to decline.
    Canada added 35,400 jobs, far more than forecast, although
the gains came on the back of more part-time positions, data
    "I think the strong U.S. numbers keep some downward pressure
on the Canadian dollar," said Paul Ferley, assistant chief
economist at Royal Bank of Canada. 
    "I think the Canadian employment numbers will probably sort
of temper downside on the Canadian dollar, but I think the
strong U.S. number has increased probability that the U.S. Fed
will return to tightening mode sometime this year, and that will
keep pressure on the Canadian dollar."
    The Canadian currency hit C$1.25, or 80 U.S. cents, soon
after the reports were released, before settling at around
C$1.2465, or 80.22 U.S. cents. It closed on Thursday at
     "It's mildly supportive for the currency," said Doug
Porter, Bank of Montreal's chief economist. "But, of course, it
lands on the same day as we've got a very powerful U.S. report,
especially with revisions, so I suspect that might outweigh this
figure for the currency."
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 7.5 Canadian
cents to yield 0.471 percent and the benchmark 10-year
 was down 18 Canadian cents to yield 1.385 percent.

 (Reporting by Alastair Sharp; Editing by Bernadette Baum; and
Peter Galloway)