CANADA FX DEBT-C$ in broad retreat as investors eye jobs data

Tue Oct 7, 2014 4:42pm EDT
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* C$ at C$1.1171 vs US$, or 89.52 U.S. cents
    * Bond prices rose across the maturity curve

    By Solarina Ho
    TORONTO, Oct 7 (Reuters) - The Canadian dollar was weaker
against the greenback and other major currency counterparts on
Tuesday but it stayed clear of the more than six-month lows
reached last week as investors looked ahead to Friday's
employment figures.
    Data on Tuesday that showed a larger-than-expected drop in
Canadian building permits in August from July briefly weighed on
the currency. 
    Statistics Canada said the retreat in August was primarily
due to fewer plans to build non-residential buildings in Quebec,
and residential buildings in Ontario. Analysts noted, however,
that the permits data is typically highly volatile. 
    "We have seen it drift up a little bit, but it seems to be
anchored in this mid-to-high-C$1.11's ... We were maybe due for
a bit of a pullback in permits," said Don Mikolich, executive
director, foreign exchange sales at CIBC World Markets, adding
that investors were looking ahead to Friday's employment data.
    "It's one of the main things people are watching with a
little apprehension, because we've had such big volatile
components within that release."
    The Canadian dollar closed at C$1.1171 to the U.S.
dollar, or 89.52 U.S. cents, softer than Monday's close at
C$1.1131, or 89.84 U.S. cents.
    The currency is expected to stay around the high C$1.11 to
low C$1.12 range ahead of the jobs data, but could test last
week's low of C$1.1271, its weakest level since March, if the
employment figures are negative, Mikolich said. 
    Forecasts call for 20,000 new jobs in September, according
to a Reuters poll. 
    The Canadian dollar could also see some moves from housing
starts data due on Wednesday. Expectations may be tempered
following Tuesday's soft permits data.
    The loonie is generally expected to remain under pressure on
expectations the Federal Reserve will raise U.S. interest rates
next year, a policy move that would diverge from the Bank of
Canada. A rate hike should lift the greenback but hurt the
Canadian dollar.
    "Finally, people are starting to say, maybe we should
differentiate a little between a North America phenomenon and
see what's happening individually in both these countries. I
think that's what's coming home to roost here," said Mark
Chandler, the head of Canadian fixed income and currency
strategy at RBC Capital markets.
    "Canada's doing OK, but it still can't keep pace with the
indicators we're seeing out of the U.S."
    Canadian government bond prices were higher across the
maturity curve, with the two-year rising 5 Canadian
cents to yield 1.084 percent and the benchmark 10-year
 climbing 56 Canadian cents to yield 2.028 percent.

 (Reporting by Solarina Ho; Editing by James Dalgleish)