CANADA FX DEBT-C$ strengthens on jobs data; gains restrained as oil falls

Fri Jun 10, 2016 9:41am EDT
 
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* Canadian dollar at C$1.2689, or 78.81 U.S. cents
    * Bond prices higher across a flatter maturity curve
    * 10-year yield hit its lowest since Feb. 25 at 1.143 pct

    By Fergal Smith
    TORONTO, June 10 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday after
stronger-than-expected domestic jobs data, although gains for
the risk-sensitive commodity-linked currency were restrained as
oil prices and stocks fell.
    Canada's economy added a higher-than-expected 13,800 jobs in
May as full-time employment gains more than offset part-time
losses, Statistics Canada data showed. 
    However, some of the gains were associated with the 2016
Census and private sector jobs fell.
    "Given the public sector skew to the numbers I think the
markets and the Bank of Canada will see through the surprising
strength in the headline number," said Sal Guatieri, senior
economist at BMO Capital Markets.
    Oil prices fell as a stronger U.S. dollar pulled crude off
the 2016 highs hit this week, although strong refinery demand
and global supply disruptions lent support. U.S. crude 
prices were down 1.92 percent to $49.59 a barrel. 
    At 9:26 a.m. EDT (1326 GMT), the Canadian dollar 
was trading at C$1.2689 to the greenback, or 78.81 U.S. cents,
stronger than Thursday's close of C$1.2713, or 78.66 U.S. cents.
    The currency's strongest level of the session was C$1.2660,
while its weakest was C$1.2759. On Wednesday, the loonie touched
a five-week high at C$1.2655.
    Safe-haven assets, such as core sovereign debt, advanced as
global issues, including uncertainty over U.S. interest rate
hikes and the impending vote on Britain's membership in the
European Union, kept investors cautious. 
    Canadian government bond prices were higher across the
maturity curve in sympathy with U.S. Treasuries. The two-year
 price rose 1 Canadian cent to yield 0.512 percent and
the benchmark 10-year climbed 39 Canadian cents to
yield 1.143 percent.
    The 10-year yield hit its lowest since Feb. 25 at 1.143
percent.
    The curve flattened, as the spread between the 2-year and
10-year yields narrowed by 3.6 basis points to 63.1 basis
points, indicating outperformance for longer-dated maturities. 

 (Reporting by Fergal Smith; Editing by Nick Zieminski)