CANADA FX DEBT-C$ hit by greenback rally as market braces for jobs data

Thu Apr 9, 2015 5:07pm EDT
 
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* Canadian dollar at C$1.2592 or 79.42 U.S. cents
    * Bond prices mostly higher across the maturity curve

    By Solarina Ho
    TORONTO, April 9 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday, hurt by a rallying U.S.
dollar and investor positioning ahead of Friday's Canadian
employment report for March.
    The Canadian economy has been feeling the pinch from the
dramatic plunge in crude prices since last summer and markets
have broadly expected the first quarter to be especially weak.
    Economists polled by Reuters expect no new jobs to have been
created last month, and the unemployment rate to remain steady
at 6.8 percent.
    Meanwhile the U.S. dollar hit its highest level in almost
three weeks on Thursday, as interest rate differentials with
Europe widened.
    "Today's move can be partially explained by overall U.S.
dollar appreciation almost across the board," said Brad
Schruder, director of foreign exchange sales at BMO Capital
Markets, adding that this was likely the beginning of another
round of U.S. dollar moves higher and that the cautious trade
was not to be long on the Canadian dollar.
    "What you're also seeing is a combination of some
profit-taking in preparation of the risk with tomorrow's number,
which is definitely to the downside as far as job creation
goes."
    The Canadian dollar finished the session at
C$1.2592 to the greenback, or 79.42 U.S. cents, more than half a
cent weaker than the Bank of Canada's official close of
C$1.2538, or 79.76 U.S. cents, on Wednesday.
    The Canadian dollar has been trading between C$1.2350 and
C$1.2850 since January, when the Bank of Canada shocked markets
with a 25 basis point interest rate cut.
    Early in the day, U.S. data showed the number of Americans
filing new claims for jobless benefits rose less than expected
last week, suggesting an abrupt slowdown in job growth in March
could be temporary. 
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year price down 2
Canadian cents to yield 0.513 percent and the benchmark 10-year
 sliding 32 Canadian cents to yield 1.374 percent.
    The Canada-U.S. two-year bond spread was -3.9, while the
10-year spread was -58.9.
   

 (Reporting by Solarina Ho; Editing by Peter Galloway)