CANADA FX DEBT-C$ weakens to a 6-month low as risk appetite dips

Fri Oct 7, 2016 4:48pm EDT
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(Adds portfolio manager quotes, details on Bank of Canada
survey, CFTC data, comments by prime minister, updates prices)
    * Canadian dollar ends at C$1.3285, or 75.27 U.S. cents
    * Loonie touches its weakest since March 16 at C$1.3315
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Oct 7 (Reuters) - The Canadian dollar weakened to a
six-month low against its U.S. counterpart on Friday as
volatility in the foreign exchange market and lower oil prices
offset stronger-than-expected domestic jobs data.
    Canada's economy created 67,200 jobs in September, far more
than expected, though that was fueled by the biggest increase in
self-employed workers in more than seven years.
    "I don't think on its own it's warranted for the Canadian
dollar to be where it is," said Hosen Marjaee, senior managing
director, Canadian fixed income at Manulife Asset Management,
who pointed to the strength of recent domestic data.
    Canadian companies' hiring and investment intentions
improved modestly in the third quarter, while resource firms
believe the sector may be bottoming out after prolonged
weakness, the Bank of Canada said. 
    The so-called "flash crash" that knocked sterling to a
31-year low and increased tensions between Russia and the United
States over Syria have triggered demand for safe-haven
currencies such as the Japanese yen and the U.S. dollar
 at the expense of the loonie, Marjaee said.
    U.S. employment growth unexpectedly slowed for the third
straight month in September. 
    Still, the U.S. jobs data was not so weak as to derail a
potential interest rate hike by the Federal Reserve in December,
said Marjaee.
    The Canadian dollar ended at C$1.3285 to the
greenback, or 75.27 U.S. cents, weaker than Thursday's close of
C$1.3213, or 75.68 U.S. cents.
    The currency's strongest level of the session was C$1.3187,
while it touched its weakest since March 16 at C$1.3315.
    Friday's closing level was above the loonie's 200 day moving
average at C$1.3212, according to Reuters data. The currency
lost 1.3 percent for the week.    
    U.S. crude prices settled down 63 cents at $49.81 a
barrel as investors took profit on recent gains. 
    Speculators increased bearish bets on the Canadian dollar,
Commodity Futures Trading Commission data showed. Net short
Canadian dollar positions increased to 14,077 contracts in the
week ended Oct. 4 from 11,615 in the prior week.    
    Canadian government bond prices were lower across the yield
curve, with the two-year down 2 Canadian cents to
yield 0.592 percent and the benchmark 10-year 
falling 29 Canadian cents to yield 1.17 percent.
    The Canadian government is trying to dispense infrastructure
investments into the economy as quickly as possible to spur
growth, Prime Minister Justin Trudeau said during a Reuters
Newsmaker event in Toronto. 

 (Editing by Bernadette Baum and Chris Reese)