CANADA FX DEBT-C$ at six-month low on Canadian trade, U.S. jobs data

Fri Oct 3, 2014 9:27am EDT
 
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* Canadian dollar at C$1.1226 or 89.08 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Oct 3 (Reuters) - The Canadian dollar weakened to a
more than six-month low against the greenback on Friday as it
was hit by a combination of disappointing domestic data and
better-than-expected jobs growth south of the border.
    The declines pushed the loonie back through resistance at
the C$1.12 level and put it within sight of reaching 2014's low
so far at C$1.1279, which was seen in March.
    "It's a bit of a perfect storm for the currency," said Mazen
Issa, senior Canada macro strategist at TD Securities in
Toronto.
    Canada unexpectedly posted a trade deficit in August as
exports dropped, while imports rose by the highest amount in
almost two years. 
    At the same time, U.S. job growth accelerated in September
and the unemployment rate fell, giving the greenback a boost to
the loonie's detriment. Canada will not release its jobs figures
for September until next week. 
    The Canadian dollar was at C$1.1226 to the
greenback, or 89.08 U.S. cents, weaker than Thursday's close of
C$1.1163, or 89.58 U.S. cents. The loonie touched a session low
of C$1.1244, its lowest level since late March.
    The Canadian dollar is down 0.7 percent for the week so far,
putting it on track for its second week of declines in a row.
    The Canadian trade figures imply economic growth for the
third quarter that is now in the low 2 percent area, when it had
been previously tracking at 2.5 percent, said Issa.
    "It's quite a dent in what expectations were for the
quarter, but it certainly gives a lot of vindication for the
Bank of Canada to have pounded the table, so to speak, on being
cautious on the outlook," he said.
    Recent comments from Bank of Canada officials have
reinforced the market's view of the bank's neutral-to-dovish
policy stance. The central bank will release its next policy
statement later in the month, along with updated economic
forecasts. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 1-1/2 Canadian
cents to yield 1.128 percent and the benchmark 10-year
 down 16-1/2 Canadian cents to yield 2.106 percent.

 (Reporting by Leah Schnurr; Editing by Chizu Nomiyama)