CANADA FX DEBT-C$ weakens as U.S. job gains outshine Canada's

Fri Feb 6, 2015 5:05pm EST
 
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(Adds analyst's comment, details, updates prices to close)
    * C$ ends at C$1.2524, or 79.85 U.S. cents
    * Bond prices lower across the curve

    By Alastair Sharp
    TORONTO, Feb 6 (Reuters) - The Canadian dollar 
weakened on Friday after robust U.S. jobs data impressed the
market more than a stronger-than-expected Canadian employment
report, while a downgrade of Greece's credit rating also fueled
greenback buying.
    Both U.S. and Canadian jobs figures for January showed gains
but the U.S. numbers were more unambiguously positive, boosting
expectations the Federal Reserve will raise interest rates by
mid-year, while Canadian rates are seen likely to decline. 
    A downgrade of Greece's sovereign debt rating by Standard &
Poor's, as the country's newly elected leftist government seeks
to renegotiate its debt obligations to the European Union, also
spurred safe-haven buying of the greenback.
  
    "It's been an unambiguous bid for the U.S. dollar across the
board," said Jack Spitz, managing director of foreign exchange
at National Bank Financial.
    The Canadian currency hit C$1.25, or 80 U.S. cents, soon
after the jobs reports were released, before weakening steadily
through the session to close at C$1.2524, or 79.85 U.S. cents.
It closed on Thursday at C$1.2424.
    It gained 1.5 percent on the week, helped by several surges
on the back of crude oil price gains. Canada is a major oil
producer.
    The United States added 257,000 jobs in January, while
Canada added 35,400, mostly part-time. 
 
    "I think the Canadian employment numbers will probably sort
of temper downside on the Canadian dollar," said Paul Ferley,
assistant chief economist at Royal Bank of Canada. "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."
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 13 Canadian
cents to yield 0.499 percent and the benchmark 10-year
 off 86 Canadian cents to yield 1.453 percent.
    National Bank's Spitz said a speech on Tuesday by Bank of
Canada Senior Deputy Governor Carolyn Wilkins should clarify the
central bank's thinking after its shock January rate cut. 
    "In light of the lack of transparency with respect to the
last Bank of Canada cut I think we should rightfully be looking
for some guidance this time around," he said. "It represents an
opportunity for the bank to express its views and the market
will be paying a lot of attention to it."

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