CANADA FX DEBT-C$ hurt by U.S. jobs data, BoC report supports

Mon Apr 9, 2012 4:58pm EDT
 
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* C$ ends at C$0.9965 vs US$, or $1.0035
    * Soft U.S. jobs data weighs on markets
    * Bank of Canada survey on outlook supportive
    * Bond prices higher across curve

    By Jon Cook	
    TORONTO, April 9 (Reuters) - The Canadian dollar slid
against the U.S. currency in thin post-Easter trade on Monday as
the effects of last week's disappointing U.S. jobs data
lingered, offsetting a relatively positive Bank of Canada survey
on the economic outlook.	
    Friday's data showed U.S. payrolls grew by 120,000 in March,
far below the expected gain of 203,000 jobs, keeping the door
open for the U.S. Federal Reserve to provide more monetary
support to boost the economy. 	
    The Canadian dollar finished at C$0.9965 versus the
U.S. currency, or $1.0035, down from Thursday's close at
C$0.9938 versus the U.S. currency, or $1.0062. Most Canadian
traders were away from their desks on Friday because of the
holiday weekend.	
    The Canadian dollar recovered slightly on Monday after
falling to a session and April low at C$1.0002, or 99.98 U.S.
cents.	
    "As equities are grinding back, so is the Canadian dollar,"
said Jack Spitz, a managing director of foreign exchange trading
at National Bank Financial.	
    "The majority of influence in the market has come on the
heels of Friday's payroll miss in the States, which created the
risk-off (U.S.) dollar bid story."	
    The Canadian dollar was also helped by a Bank of Canada
survey on Monday that revealed Canadian business sentiment on
future sales rose to its highest level in two years and
companies also expect to hire more staff. 	
    The report comes after Bank of Canada officials have sounded
less dovish in recent statements, prompting talk of a rate hike
sooner than previously expected.	
    "There's more optimism," said Spitz. "We could start to see
some guidance with respect to indicating when the Bank would
likely be next to hike."	
    The central bank's next policy announcement date is April
17. A survey of Canada's primary dealers last month found they
expected the Bank of Canada to keep interest rates steady until
the third quarter of 2013. 	
    But that was before stellar Canadian employment data last
week that showed the economy added 82,300 jobs in March, the
largest monthly gain since September 2008. 	
    Short of a hike or a major downside risk event, the Canadian
dollar will likely stay in its present range between C$0.9950
and C$1.0050 against the U.S. currency, said Matt Perrier, a
director of foreign exchange sales at BMO Capital Markets.	
    "We've got to see Canada weaken through that C$1.0025-50
area to start things accelerating to the topside for the U.S.
dollar versus the Canadian dollar," Perrier added.	
    Canadian government bond prices were higher across the curve
with Canada's 2-year bond up 5 Canadian cents to
yield 1.234 percent, while the 10-year bond gained
58 Canadian cents to yield 2.061 percent.