CANADA FX DEBT-C$ weakest since Oct. 2011 as US$ rallies on jobs

Fri Jul 5, 2013 4:36pm EDT
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* C$ at C$1.0567 vs US$, or 94.63 U.S. cents
    * Touches C$1.0609, or 94.26 U.S. cents, weakest since Oct.
    * Canada sheds 400 jobs, U.S. adds 195,000 new jobs
    * 10-year bond yields highest in nearly 2 years

    By Solarina Ho
    TORONTO, July 5 (Reuters) - The Canadian dollar fell to its
weakest level against the U.S. dollar in 21 months on Friday
after North American jobs data showed Canada losing a modest 400
jobs and the U.S. labor market steadily improving.
    U.S. jobs growth was stronger than expected last month, with
employers adding 195,000 new jobs and an upward revision for
both April and May. The numbers added to expectations that the
Federal Reserve may be ready to scale back its bond purchases as
early as September. 
    "It's still a U.S. dollar story. It has been for weeks if
not months, and today's U.S. job report was essentially a
home-run," said Rahim Madhavji, president at commercial foreign
exchange dealing firm Knightsbridge Foreign Exchange.
    "Basically what that means is we're heading toward the
reduction of stimulus."
    The Canadian dollar, which was mostly outperforming
other currencies, finished its North American session at
C$1.0567 versus the rallying greenback, or 94.63 U.S. cents,
weaker than immediately before the data was released and off
Thursday's finish at C$1.0521 to the U.S. dollar, or 95.05 U.S.
cents. Earlier, it had traded as soft as C$1.0609, or 94.26 U.S.
cents, its weakest level since early October 2011.
    In Canada, market analysts polled by Reuters had predicted a
loss of 2,500 jobs following May's huge 95,000 new positions,
the second highest increase on record. 
    "This is about as close to expectations as we've seen in
quite some time for Canada's employment report - no big surprise
at all that we had basically a flat month after the blowout in
May," said Doug Porter, chief economist at BMO Capital Markets.
    Prices for Canadian government debt fell sharply across the
maturity curve. The two-year bond was down 9.5
Canadian cents to yield 1.229 percent. The benchmark 10-year
bond gave back C$1.08 to yield 2.546 percent, its
highest yield since early August 2011.