CANADA FX DEBT-C$ stumbles on North American jobs data

Fri Jul 6, 2012 4:29pm EDT
 
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* C$ ends at C$1.0186 vs US$, or 98.17 U.S. cents
    * Currency weakens 0.2 percent for the week
    * Bond prices creep higher across curve

    By Jennifer Kwan
    TORONTO, July 6 (Reuters) - Canada's dollar stumbled against
the U.S. currency along with global stock and commodity prices
on Friday after jobs reports on both sides of the border showed
sluggish growth in the labor market in June.
    Stocks on major exchanges plummeted and the euro hit 5-week
lows after U.S. jobs data for June came in weaker than expected,
fueling concerns that Europe's debt crisis is deepening a
slowdown in the U.S. economy.  
    "I think there is disappointment that we are continuing to
see sluggish growth in U.S. employment," said Paul Ferley,
assistant chief economist at Royal Bank of Canada, the country's
largest bank.
    "It certainly argues for the (U.S.) Fed to keep policy very
accommodative and it also argues for the Bank of Canada to keep
conditions very accommodative."
    Canada's job growth slowed in June for a second straight
month in a reality check after outsized employment gains earlier
this year, firming the markets' view that the central bank won't
act soon on recent hints of a rate hike. 
    "After gaining a lot of jobs in March and April, we're
looking at a slightly subdued pace of hiring," said David Tulk,
chief Canada macro strategist at TD Securities.
    "I think this does speak to some residual momentum in the
Canadian economy but perhaps a little bit more caution on the
part of firms looking at some of the international headwinds and
maybe a sense of domestic fatigue." 
     The Canadian currency ended at C$1.0186 versus the
U.S. dollar, or 98.17 U.S. cents, weaker than Thursday's finish
at C$1.0144, or 98.58 U.S. cents.
    Immediately after the data came out the Canadian dollar
swung to a session high and low as traders digested the twin
reports.
    Meanwhile, oil and copper prices fell, along with gold. U.S.
and German government bond prices leapt, with investors seeking
safe havens in U.S. Treasuries and German bunds.
    The market move was also dampened as investors remained
unimpressed after a trio of major central banks loosened
monetary policy in the previous session. 
    Canadian bond prices edged up across the curve, tracking
moves in U.S. Treasuries where debt yields hit a one-month low
after the jobs data raised expectations for more easing from the
Fed. 
    Canada's two-year government bond edged up 8
Canadian cents to yield 0.988 percent, while the benchmark
10-year bond added 27 Canadian cents to yield 1.693
percent.