CANADA FX DEBT-C$ falls on jobs data; weak US$ supports

Fri Aug 10, 2012 3:26pm EDT
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* C$ hits session low of C$0.9970 vs US$, $1.0030
    * Canada's economy unexpectedly lost 30,400 jobs in July
    * Bonds higher across curve

    By Jennifer Kwan
    TORONTO, Aug 10 (Reuters) - The Canadian dollar eked out a
small gain on Friday after sinking to a session low on Friday on
an unexpectedly weak domestic data report for July, diminishing
expectations the Bank of Canada would raise interest rates any
time soon.
    The Canadian currency sank to C$0.9970 against the
U.S. dollar, or $1.0030, after data showed the economy
unexpectedly lost 30,400 jobs in July in a third disappointing
month for the labor market with growth failing to gain momentum.
    Camilla Sutton, chief currency strategist at Scotiabank,
said the report follows a string of disappointing releases.
    "I don't think the market ever fully believed in the Bank of
Canada's fairly hawkish tone, but it certainly dampens
expectations for rate hikes in Canada," said Sutton.
    But the currency clawed back from its weak point to hover
around C$0.9917, or $1.0084, a hair higher from its North
American finish at C$0.9920 versus the U.S. currency, or
    "What the price action today would indicate, in terms of the
move lower in dollar/Canada, it would be based on some squaring
of long dollar positions heading into the weekend. Nothing more,
nothing less," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
    "Euro is still trading the range. Dollar/Canada is still
holding above the calendar low, but the move today has served to
counteract the negative implications of that miss we saw earlier
today," he added, referring to the worse-than-expected
employment report.
    The data showed net job losses resulted from the elimination
of 51,600 part-time positions, which overshadowed the 21,300
full-time jobs created, according to Statistics Canada data on
Friday. There was little change in both public and private
sector employment.
    The jobless rate climbed to 7.3 percent from 7.2 percent,
with the biggest layoffs in wholesale and retail trade and in
professional, scientific and technical services.
    The market had expected some 9,000 jobs to be created in
July after mediocre gains of 7,300 in June and 7,700 in May.
    Apart from those key events there was little to sway the
currency, said Spitz.
    Global shares lost momentum on Friday, falling slightly for
the first time in five days, on weak Chinese trade data, though
declines were limited by expectations policymakers could act to
shore up the world's economies. Toronto and U.S. stocks were
little changed.   
    Stock markets' recent rally has been underpinned by comments
by European Central Bank President Mario Draghi two weeks ago
that the central bank was "ready to do whatever it takes to
preserve the euro," raising hopes of heavy bond buying to aid
Spain and Italy.
    The Canadian dollar mostly underperformed against its major
currency peers including the New Zealand dollar, sterling and
yen. Spitz said Canadian dollar resistance would likely be at
C$0.9900-10 versus the greenback.
    Canadian bond prices were mostly higher. The two-year bond
 edged up 8 Canadian cents to yield 1.122 percent, and
the benchmark 10-year bond was up 34 Canadian cents
to yield 1.775 percent.