CANADA FX DEBT-C$ pressured by jobs loss, lower oil prices

Fri Feb 5, 2016 9:49am EST
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* Canadian dollar at C$1.3790 or 72.52 U.S. cents
    * Bond prices lower across the maturity curve

    By Fergal Smith
    TORONTO, Feb 5 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday after Canadian jobs data
underlined the economy's struggles to cope with an oil shock,
while oil prices reversed lower after a tepid U.S. jobs gain.
    Canada's January jobs loss somewhat overshadowed encouraging
improvement in its trade deficit, including strength in exports.
But it is unlikely to trigger a near-term rate cut from the Bank
of Canada, according to Bipan Rai, executive director, macro
strategy at CIBC Capital Markets.
    "They are still very much waiting for the release of the
budget and any sort of fiscal stimulus," he said.
    Meanwhile, traders bet that the U.S. Federal Reserve is more
likely to raise interest rates this year after the U.S.
employment report showed a long-awaited surge in wages and an
unemployment rate at an eight-year low. 
    U.S. crude prices were down 1.07 percent to $31.38 a
barrel, while Brent crude lost 0.78 percent to
    At 9:33 a.m. EST (1433 GMT), the Canadian dollar 
was trading at C$1.3790 to the greenback, or 72.52 U.S. cents, 
weaker than Thursday's official close of C$1.3745, or 72.75 U.S.
    The currency's strongest level of the session was C$1.3710,
while its weakest level was C$1.3816.
    On Thursday, the currency touched its strongest since Dec.
11 at C$1.3640.
    Canada lost 5,700 jobs in January and the unemployment rate
edged up to a two-year high of 7.2 percent. Analysts polled by
Reuters had forecast a gain of 5,500 positions and for the
unemployment rate to stay at 7.1 percent. 
    The trade deficit narrowed to a smaller-than-expected C$585
million in December from a revised C$1.59 billion in November as
exports grew at a faster pace than imports. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 5
Canadian cents to yield 0.412 percent and the benchmark 10-year
 falling 36 Canadian cents to yield 1.187 percent.
    The Canada-U.S. 10-year bond spread was 2.3 basis points
less negative at -69.3 basis points as Canadian government bonds
underperformed in the belly and at the long-end of the curve.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)