CANADA FX DEBT-C$ falls with oil ahead of jobs data

Wed Dec 2, 2009 4:57pm EST
 
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 * Canadian dollar ends down at 95.22 U.S cents
 * Bond prices fall as stocks finish higher
 * Poll sees C$ at 94.61 U.S. cents in 12 months
 (Updates to close)
 By Ka Yan Ng
 TORONTO, Dec 2 (Reuters) - Canada's currency fell versus
the U.S. dollar on Wednesday, tracking a downward swing in the
the price of oil as investors cooled their heels ahead of major
employment reports at the end of the week.
  Crude, which is a key Canadian export, settled below $77 a
barrel, more than 2 percent lower.
 Employment data showing U.S. private employers shed 169,000
jobs in November was worse than forecast, though lower than
October's numbers. But it raised investor worries that the
broader U.S. employment report for November on Friday might be
weak. [ID:nN02192113]
 Canada is also due to report November employment data on
Friday, and the report is expected to show a gain of 15,000
jobs. ECONCA  [ID:nN0236002]
 "The inability of the Canadian dollar to break below C$1.04
yesterday has taken the wind out of the some of the sails,"
said John Curran, senior vice-president at CanadianForex, a
commercial foreign exchange dealing firm.
 "People have been buying up the U.S. dollar a little
because of lack of follow-through on the selloff ... and it
makes sense to pare down some of the risk that you have if
there's an inkling that these jobs numbers are going to be
worse than expected."
 The Canadian dollar closed at C$1.0502 to the U.S. dollar,
or 95.22 U.S cents, down from C$1.0467 to the U.S. dollar, or
95.54 U.S cents, in the previous session.
 On Tuesday, the currency climbed as high as C$1.0406 to the
U.S. dollar, or 96.10 U.S. cents, its highest level since Oct.
21.
 It failed to hold those gains and make a closing high at
key level C$1.0419 on Tuesday, which would have represented an
end to a recent trading range and would have set the currency
on further gains, RBC Capital Markets said.
 Canada's currency will drop slightly in value against the
U.S. dollar in 12 months but may have a brief fling with parity
in the interval, according to a Reuters poll of market
strategists released on Wednesday. [ID:nN02450477]
 Also on Wednesday, the federal government reiterated its
forecast that its 2009-10 budget deficit will be a record high
C$55.9 billion, but it said it would cut that in half in two
years by winding down its economic stimulus plan.
[ID:nN02536715]
 The stimulus spending report did not significantly affect
the currency, said Camilla Sutton, currency strategist at
Scotia Capital.
 BONDS FALL
 Canadian bond prices were mostly lower as stock markets
made a late-session march higher as gold prices picked up steam
again after retreating from a record high.
New issues continued to be a factor to watch on Wednesday,
with the province of Ontario offering C$825 million of debt in
a two-part deal. This came on the heels of huge debt offerings
earlier this week, which market players said would be a
highlight of the bond market in the remaining weeks before the
holidays. [CAN-ISU]
 The two-year government bond CA2YT=RR fell 5 Canadian
cents to C$100.25 to yield 1.125 percent, while the 30-year
bond CA30YT=RR fell 10 Canadian cents to C$118.85 to yield
3.879 percent.
 (Editing by Peter Galloway)
 ((kayan.ng@thomsonreuters.com; Reuters Messaging:
kayan.ng.reuters.com@reuters.net; 416-941-8109))
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