CANADA FX DEBT-C$ marginally weaker ahead of jobs data

Thu Jul 4, 2013 4:53pm EDT
 
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* C$ at C$1.0521 vs US$, or 95.05 U.S. cents
    * U.S. markets closed for Independence Day
    * ECB, BoE issue dovish policy statements
    * Focus on U.S., Canada jobs data on Friday
    * Bond prices mostly higher across maturity curve

    By Solarina Ho
    TORONTO, July 4 (Reuters) - The Canadian dollar was
marginally weaker against its U.S. counterpart on Thursday, as
investors mostly kept to the sidelines ahead of North American
jobs data on Friday and with U.S. markets closed for the
Independence Day holiday.
    Markets were primarily focused on overseas news, where the
Bank of England and the European Central Bank both gave dovish
outlooks. The central banks are trying to offset the impact of
an expected stimulus withdrawal by the Federal Reserve later
this year. 
    Just four days into his new job, BoE Governor Mark Carney
surprised markets with a statement indicating the bank was in no
rush to raise rates, while the ECB's Mario Draghi said it would
keep interest rates at record lows for an extended period and
may yet cut further.  
    The Canadian currency, which had strengthened to
C$1.0472 per U.S. dollar following the ECB comments, closed the
North American session at C$1.0521 versus the U.S. dollar, or
95.05 U.S. cents in spotty holiday trading. This was slightly
weaker than Wednesday's finish at C$1.0510, or 95.15 U.S. cents.
   "We just seem to be sitting in that zone between support and
resistance," said Don Mikolich, executive director, foreign
exchange sales at CIBC World Markets.
    The United States and Canada will both report monthly labor
data tomorrow, with the U.S. numbers expected to show steady
improvement in the jobs market. 
    In Canada, economists are expecting a drop in jobs,
according to a Reuters poll, following the surprising 95,000
jobs created in May. 
    "In Canada, there's expected to be a bit of give back from
last month's pretty stupendous number," said Greg Moore, FX
Strategist at TD Securities, which is forecasting a
greater-than-consensus decline in jobs.
    CIBC's Mikolich said the Canadian data would have to be
fairly negative for the Canadian dollar to sell-off.
    "Even if you see a small negative, you could argue, well,
the average over the past few months is still overwhelmingly
positive," he said.
    Prices for Canadian government debt were higher across the
maturity curve. The two-year bond climbed 2.5
Canadian cents to yield 1.181 percent, while the benchmark
10-year bond added 2 Canadian cents to yield 2.417
percent.