Canadian dollar higher despite early-morning slide

Fri Feb 1, 2008 10:33am EST
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar was higher versus the U.S. dollar on Friday morning but off its earlier highs as an initial boost after the release of U.S. jobs data was reversed when the report was considered stronger than the headline suggested.

Canadian bond prices were higher across the curve as the jobs data supported the idea of more interest rate cuts by the U.S. Federal Reserve.

At 10:00 a.m., the Canadian currency was at C$1.0009 to the U.S. dollar, or 99.91 U.S. cents, up from C$1.0038 to the U.S. dollar, or 99.62 U.S. cents, at Thursday's close.

The Canadian dollar rallied to US$1.0070, valuing a U.S. dollar at 99.30 Canadian cents, immediately after the U.S. jobs data before turning back lower as investors digested the report.

Nonfarm payrolls in the United States dropped 17,000 in January, below expectations for a rise of 80,000.

But the report also included a revision that put December's new-job total at 82,000 from 18,000.

"People had been thinking if we get a negative on payrolls then just sell the (U.S.) dollar and that had an initial impact but it wore off quickly," said David Watt, senior currency strategist at RBC Capital Markets.

"The sentiment lingering overall is going to be that this is still a sign that the U.S. economy is slowing down ... but not as much as that initial shock value would indicate."   Continued...