CORRECTED-CANADA FX DEBT-C$ rallies on U.S. labor news, ECB move

Thu Sep 6, 2012 12:21pm EDT
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(Corrects Thursday morning trading levels in 8th paragraph)
    * C$ at C$0.9854 vs US$, or $1.0148
    * U.S. private sector adds more jobs than expected in August
    * Weekly U.S. jobless claims at lowest level in a month
    * ECB sets out bond buying program
    * Bond prices lower across curve

    By Solarina Ho
    TORONTO, Sept 6 (Reuters) - The Canadian dollar advanced
against its U.S. counterpart on Thursday morning, buoyed by some
rare positive data from the struggling U.S. labor market and
gaining tepid support from European Central Bank's
much-anticipated move to launch a bond-buying program to try to
draw a line under the region's debt crisis.
    The U.S. private sector added 201,000 jobs in August - more
than economists had expected - while the number of Americans
filing new claims for jobless benefits fell last week to the
lowest level in a month.  
     Also, the ECB took action to lower the borrowing costs of
struggling euro zone countries by launching a new bond-buying
program that does not set a limit on how much sovereign debt it
can buy.  
    Greg Moore, FX Strategist at TD Securities, said that
despite the ECB move and a positive reaction on stock markets,
the overall underlying theme in the foreign exchange market is
still "risk-off" with currency traders disappointed by the lack
of details in the ECB announcement. 
    Much of the ECB's announcement was priced in already
following leaks and reports earlier, he said. The euro slid
against the U.S. dollar in volatile trading on Friday after
initially rising on ECB hopes.
     He noted also that the market was cautiously awaiting a
German court ruling next week on the constitutionality of
Germany participating in bond buying in Europe.
    "That said, the C$ is looking a little bit stronger in the
aftermath of this and that could be essentially focusing a
little bit more on what might come next week from the Fed,"
Moore added. "I think from a bigger perspective though, the
dollar/CAD is sitting in the same neutral range that it's been
in since the middle of August."
    At 9:30 a.m. (1330 GMT), Canada's dollar was
trading at C$0.9854 against the greenback, or $1.0148, up from
Wednesday's North American finish of C$0.9909 versus the U.S.
dollar, or $1.0092.
    It had touched a session high minutes after the U.S. labor
data was released, briefly pared gains during the ECB news
conference, and then strengthened further.
    Royal Bank of Canada said the currency would likely trade
between C$0.9850 and C$0.99 for the day as traders look ahead to
Friday's monthly employment data from Canada and the United
States as well as to a U.S. Federal Reserve meeting next week. 
    Canadian government bonds were lower across the curve, with
the two-year bond easing 8 Canadian cents to yield
1.152 percent. The benchmark 10-year bond price was
down 55 Canadian cents, to yield 1.814.

 (Reporting by Solarina Ho; Editing by Peter Galloway)