CANADA FX DEBT-C$ weaker after mixed North American jobs data

Fri Sep 4, 2015 4:45pm EDT
 
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(Updates with comments from Smith, closing figures, details)
    * Canadian dollar at C$1.3265, or 75.39 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Sept 4 (Reuters) - Canada's dollar pulled back
against its U.S. counterpart on Friday as crude oil prices fell
and markets digested mixed U.S. and Canadian employment data for
August.
    Canada unexpectedly added 12,000 jobs last month, which
diverged with economists' prediction of a loss of 4,500 jobs.
But the unemployment rate climbed to 7.0 percent after having
held steady at 6.8 percent for half a year. 
    "It was a little surprising to see the Canadian dollar
behave as it has over the course of the session, because the
employment data was, in my opinion, fairly robust," said Scott
Smith, senior market analyst at Cambridge Global Payments in
Calgary, noting that weak oil prices and U.S. job numbers took
the spotlight.
    U.S. employment growth rose less than expected in August
even as the unemployment rate dropped to a near 7-1/2-year low
of 5.1 percent and wages rose. 
    "You don't have to dig too far beneath the surface to see
that it's a little bit more of a nuanced picture on both
reports," said Doug Porter, chief economist at BMO Capital
Markets.
    The Canadian dollar finished at C$1.3265 to the
greenback, or 75.39 U.S. cents, weaker than the Bank of Canada's
official close of C$1.3194, or 75.79 U.S. cents on Thursday.
    The loonie remained within recent trading ranges, hitting
between C$1.3160 and C$1.3290 through Friday's session.
    Oil prices fell some 2.0 percent on Friday as risk-adverse
sentiment dominated markets and traders remained concerned about
excess supply, brushing off figures that showed the number of
U.S. rigs drilling for oil fell. 
    Looking ahead to next week, the currency is expected to move
in lock-step with oil prices until the Bank of Canada's next
policy decision, due on Wednesday.
    The Canadian data, alongside trade and economic growth
reports earlier this week, is unlikely to persuade the Bank of
Canada that another interest rate cut is necessary at this time.
    "We won't see the Bank of Canada do anything at this meeting
... but I'd be cautious of thinking the Canadian economy has
turned a corner at this point," said Smith.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 2
Canadian cents to yield 0.441 percent and the benchmark 10-year
 falling 22 Canadian cents to yield 1.439 percent.
    The Canada-U.S. two-year bond spread narrowed to -26.8 basis
points, while the 10-year spread narrowed to -69.2 basis points.

 (Reporting by Solarina Ho; Editing by Paul Simao)