CANADA FX DEBT-C$ drops after disappointing jobs report

Fri May 9, 2014 9:32am EDT
 
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* Canadian dollar at C$1.0904 or 91.71 U.S. cents
    * Bond prices mixed across the maturity curve

    By Leah Schnurr
    TORONTO, May 9 (Reuters) - The Canadian dollar weakened
sharply against the greenback on Friday and was hovering around
session lows after data showed the domestic economy unexpectedly
shed jobs last month.
    Canada's economy lost 28,900 jobs in April, defying
expectations for a gain of 12,000 and suggesting the labor
market is stalled. The unemployment rate held steady at 6.9
percent. 
    Still, analysts noted how volatile the report tends to be. 
    "You have to take a 3-month trend to see what is happening.
Yes, job growth has slowed in Canada, but it is not the disaster
that the April report suggests," said Sal Guatieri, senior
economist at BMO Capital Markets.
    Heading into the report, analysts had seen the loonie as
vulnerable to a drop if the jobs data disappointed after the
currency rose strongly earlier in the week. The Canadian dollar
had touched a four-month high on Thursday.
    "This is just going to push us back into a bigger range now
that we're trading back above that C$1.0858 level," said David
Bradley, director of foreign exchange trading at Scotiabank in
Toronto.
    "There's probably more room for U.S. dollar-Canadian dollar
to trade a little bit higher in the near-term."
    The Canadian dollar was at C$1.0904 to the
greenback, or 91.71 U.S. cents, weaker than Thursday's close of
C$1.0823, or 92.40 U.S. cents. The loonie hit a session low of
C$1.0916.
    Overnight, data out of China showed consumer prices posted
the smallest rise in 18 months in April, boosting market
expectations the country will ease monetary policy.
 
    The loonie can be sensitive to economic developments in
China, which is a major consumer of natural resources, but the
Canadian job report took precedence.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year up 1-1/2 Canadian
cents to yield 1.067 percent, while the benchmark 10-year
 was unchanged to yield 2.373 percent.












 (Additional reporting by Euan Rocha and Allison Martell Editing
by W Simon)