December 2, 2016 / 2:57 PM / 8 months ago

CANADA FX DEBT-C$ posts a 6-week high, supported by jobs gain

3 Min Read

* Canadian dollar at C$1.3279, or 75.31 U.S. cents
    * Loonie touches its strongest since Oct. 21 at C$1.3254
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Dec 2 (Reuters) - The Canadian dollar strengthened
to a six-week high against its U.S. counterpart on Friday as
domestic jobs increased for the fourth straight month,
supporting the view that the Bank of Canada will remain on hold
at next week's announcement.
    The Canadian economy added 10,700 jobs in November and the
jobless rate fell to a five-month low of 6.8 percent, with
part-time work accounting for the gains for the second month in
a row, Statistics Canada said. 
    Analysts polled by Reuters had predicted a loss of 20,000
jobs and said the jobless rate would stay at 7.0 percent.       
    "I think the labor market has moved in the right direction
in the last couple of job reports, so I don't see strong reason
for the Bank of Canada to ease ... especially after this week's
OPEC decision," said William Adams, senior international
economist at PNC Financial Services Group.
    The Organization of the Petroleum Exporting Countries
reached an agreement on Wednesday to cut output, triggering a
rally in crude oil, one of Canada's major exports.
    Oil held on to this week's sharp gains. U.S. crude 
prices were up 0.45 percent at $51.29 a barrel. 
    At 9:30 a.m. EST (1430 GMT), the Canadian dollar 
was trading at C$1.3279 to the greenback, or 75.31 U.S. cents,
stronger than Thursday's close of C$1.3317, or 75.09 U.S. cents.
    The currency's weakest level of the session was C$1.3319,
while it touched its strongest since Oct. 21 at C$1.3254.
    The U.S. dollar dipped against a basket of currencies
despite data showing a solid rise in U.S. jobs that made it
almost certain that the Federal Reserve will raise interest
rates later this month, with investors taking a cautious stance
before Italy's referendum on constitutional reform on Sunday.
  
    The implied probability of a Bank of Canada interest rate
hike by mid-2017 was nearly 30 percent, overnight index swaps
data showed, little changed from before the jobs data. Just one
month ago there was a 30 percent probability of a rate cut.
 
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year 
rose 0.5 of a Canadian cent to yield 0.754 percent and the
benchmark 10-year climbed 18 Canadian cents to yield
1.653 percent.
    On Thursday, the 10-year yield touched its highest in more
than one year at 1.712 percent as the rally in oil prices raised
inflation expectations.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama)

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