CANADA FX DEBT-C$ slides to more than 5-year low on jobs data
(Updates with fresh comment and closing figures) * Canadian dollar at C$1.1432 or 87.47 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, Dec 5 (Reuters) - The Canadian dollar dropped to its weakest level against the greenback in more than five years on Friday after U.S. employment data for November came in stronger than expected and Canadian job figures were weaker than foreseen. The U.S. figures showed strength in both wage growth and job creation, offering more signals that the U.S. Federal Reserve might be getting closer to raising interest rates. In Canada, however, the jobs data affirmed expectations that the Bank of Canada will stay on hold on rates until late next year. "The Bank of Canada will talk up a storm ... but the bottom line is we don't anticipate the Bank of Canada to really take any action until maybe the second half of 2015 at the earliest," said Darcy Briggs, a fixed-income portfolio manager at the Bissett unit of Franklin Templeton Investments, adding that the bank's next move will likely be a rate hike, not a cut. "The reaction you're seeing today is more of a U.S. dollar story rather than a Canadian dollar story ... The Bank of Canada would always like to see a weaker currency, but I think it's close to fair value now." The Canadian dollar, which was otherwise outperforming most of its counterparts, closed at C$1.1432 to the greenback, or 87.47 U.S. cents, weaker than Thursday's close of C$1.1375, or 87.91 U.S. cents. It briefly retreated to C$1.1476, or 87.14 U.S. cents, its weakest level since July 2009. Canada lost 10,700 jobs in November after two consecutive months of big gains. Analysts had expected an increase of 5,000 jobs following the gains in October and September. The unemployment rate edged up to 6.6 percent from October's 6.5 percent as expected. Market focus, however, was on the U.S. data, which showed that wages increased and that employers added 321,000 new jobs last month, the largest gain in nearly three years and the 10th straight month that growth has exceeded 200,000. "The two-year yields (in Canada) spiked higher on the U.S. data, despite the weaker Canadian data," said Derek Holt, vice president of economics at Scotiabank. "Our years of outperformance compared to the U.S. are well past us." Canadian government bond prices were mixed across the maturity curve, with short-term T-bills rising and longer-term maturities falling. The two-year was off 7 Canadian cents to yield 1.049 percent, and the benchmark 10-year lost 43 Canadian cents to yield 1.958 percent. (Editing by Peter Galloway)
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