CANADA FX DEBT-Battered oil, jobs outlook yank C$ to six-year lows

Fri Mar 13, 2015 4:46pm EDT
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(Adds comments, details, closing figures)
    * Canadian dollar at C$1.2790 or 78.19 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, March 13 (Reuters) - The Canadian dollar closed at
its weakest level against the U.S. dollar in six years on Friday
as crude prices had their worst week in three months and
February jobs data underscored expectations of a soft labor
market in the coming months.
    Canadian jobs decreased by 1,000 in February, compared with
forecasts for a loss of 5,000, but cuts in the natural resource
sector suggested the effects of plunging crude prices were
starting to trickle through the country's oil-exporting economy.
Losses in the manufacturing sector also dampened
    "Even though (the jobs figures) were better than expected,
it still reinforced the fact that the Canadian labor market will
remain soft in next few months," said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    "We're likely to see continued monetary policy divergence
between the Federal Reserve and the Bank of Canada, along with
the downward movement in oil prices that are really hitting the
loonie hard."
    U.S. crude prices sank more than 4 percent on Friday, hit by
a renewed U.S. dollar rally and warnings by the International
Energy Agency that global oversupply is intensifying. Brent
crude fell more than 2 percent. 
    The Canadian dollar ended the North American
session at C$1.2790 to U.S. dollar, or 78.19 U.S. cents, weaker
than Thursday's close of C$1.2703, 78.72 U.S. cents. 
    Earlier in the session it touched C$1.2824, or 77.97 U.S.
cents, its weakest since March 2009.
    Smith said the market was still having trouble keeping the
loonie weaker than the psychologically key C$1.28 level.
    Market focus early next week will be on the Fed's next
interest rate decision on Wednesday and on how the Fed will
adjust its forward-guidance language. The U.S. central bank is
widely expected to hike rates in the coming months, a sharp
contrast to the stance of the Bank of Canada and other central
banks around the world.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3.5 Canadian
cents to yield 0.557 percent and the benchmark 10-year
 rising 18 Canadian cents to yield 1.477 percent.

 (Reporting by Solarina Ho; Editing by Meredith Mazzilli and
Peter Galloway)