CANADA FX DEBT-C$ hit by strong greenback, weak Canadian data

Fri Mar 6, 2015 4:49pm EST
 
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(Adds closing figures, comments and details)
    * Canadian dollar at C$1.2610 or 79.30 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, March 6 (Reuters) - The Canadian dollar touched its
weakest level against the U.S. dollar in nearly two weeks on
Friday, hurt by a slew of weak domestic economic data, while
figures showing robust U.S. job growth in February pushed the
greenback to 11-1/2 year highs against a basket of currencies.
    U.S. employment accelerated in February and the jobless rate
fell to a more than 6-1/2 year low of 5.5 percent, signals that
could encourage the Federal Reserve to consider hiking interest
rates as early as June. U.S. nonfarm payrolls rose 295,000 last
month after rising 239,000 in January. Economists polled by
Reuters had expected a 240,000 rise. 
    "The Canadian dollar is in better shape than it's been in
weeks against a broad basket of currencies, but the U.S. dollar
is a unstoppable machine at the moment," said Adam Button,
currency analyst at ForexLive in Montreal, noting the
"overwhelming appetite" for the U.S. dollar.
    "The U.S. is the only country hiking rates, and those rate
hikes appear to be coming even sooner."    
    The Canadian dollar finished at C$1.2610 to the
greenback, or 79.30 U.S. cents, weaker than Thursday's close of
C$1.2506, or 79.96 U.S. cents. The currency weakened nearly 0.8
percent on the week.
    In Canada, the trade deficit hit C$2.45 billion ($1.94
billion) in January as Canada's large crude oil exports were
hurt by low prices. The deficit was considerably wider than the
C$1 billion shortfall analysts had expected and the second
highest after the C$2.87 billion recorded in July 2012.
 
    Meanwhile, labor productivity dropped by 0.1 percent in the
fourth quarter of 2014, in contrast to forecasts for no change,
and the value of Canadian building permits issued in January
sank by 12.9 percent to C$6.13 billion. Market analysts had
forecast a 4.3 percent drop.  
    The North American data underscored the likely divergence in
the monetary policies of the two countries.
    Greg Anderson, global head of foreign exchange strategy at
BMO Capital Markets, said the Canadian figures were a "disaster"
and big misses. "It puts an April rate cut right back on the
table," he said.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year slipping 1 Canadian
cent to yield 0.627 percent and the benchmark 10-year
 falling 84 Canadian cents to yield 1.613 percent.

 (Editing by Tom Brown and Peter Galloway)