January 6, 2017 / 10:17 PM / 8 months ago

CANADA FX DEBT-C$ pares gains after boost from strong Canada jobs, trade data

(Adds broker comment, updates prices to close)
    * Canadian dollar settles at CC$1.3232, or 75.57 U.S. cents
    * Loonie had hit strongest since Dec. 14 after domestic data
    * Bond prices lower across steeper maturity curve

    By Alastair Sharp
    TORONTO, Jan 6 (Reuters) - The Canadian dollar pulled back
to end barely stronger against its U.S. counterpart on Friday
after touching its strongest in more than three weeks following
surprisingly strong employment and trade data.
    The Canadian dollar settled at C$1.3232 to the
greenback, or 75.57 U.S. cents, slightly stronger than the Bank
of Canada's official Thursday close of C$1.3242, or 75.52 U.S.
cents.
    It had hit C$1.3177, its strongest level since Dec. 14, in
morning trade after Canada's economy unexpectedly added 53,700
jobs in December, all of them full-time positions, and also
posted its first trade surplus since September 2014.
 
    "You really needed the positive combination to get us below
C$1.32 and to stay there I think you're hard pressed to find a
justification just given the economic backdrop out there," said
Don Mikolich, executive director for foreign exchange sales at
CIBC Capital Markets.
    Canada's jobs data has a reputation for volatility, while
the broader economy has struggled to shake off two years of pain
caused by low oil prices.
    "We tend to take things with a bit of grain of salt and look
at the broader trends," said Jimmy Jean, economic strategist at
Desjardins. 
    The loonie, as Canada's currency is colloquially known, had
weakened to nearly C$1.36 in late December and Mikolich said
that trading range looked unlikely to be shaken.
    The U.S. dollar strengthened against a basket of currencies
following U.S. jobs data that showed slower job growth, but an
increase in wages, setting the economy up for further interest
rate increases from the Federal Reserve. 
    The Bank of Canada, by contrast, is widely seen holding
rates steady throughout 2017. 
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year price down 7.5
Canadian cents to yield 0.762 percent and the benchmark 10-year
 falling 57 Canadian cents to yield 1.729 percent.
    The Canada-U.S. two-year bond spread was -45.8 basis points,
while the 10-year spread was -70.5 basis points.

 (Additional reporting by Solarina Ho; Editing by Nick
Zieminski)

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