CANADA FX DEBT-C$ pares gains, bonds mixed on US jobs data

Thu Jul 2, 2009 10:08am EDT
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 * C$ retreats to 86.51 US cents after hitting 1-week high
 * Bonds mixed, short end rises on U.S. jobs data, stocks
 * U.S. jobs drop shakes confidence in economic recovery
 TORONTO, July 2 (Reuters) - The Canadian dollar was higher,
but off session highs, versus the U.S. currency on Thursday
morning after U.S. jobs data came in worse than expected,
raising doubts about the speed of economic recovery.
 U.S. employers cut 467,000 jobs in June, far more than
expected, while the unemployment rate rose to 9.5 percent as
the labor market continued to struggle with deep recession. The
data broke a four-month trend of moderation in job losses, and
the May figure was revised downwards. [ID:nN01210643]
 The Canadian dollar rose as high as C$1.1472 to the U.S.
dollar following the jobs figures. This reaction was
"relatively contained," said David Watt, senior currency
strategist at RBC Capital Markets.
 "I think the nonfarm payrolls report overall wasn't that
bad. Not great, but given the situation in the United States,
you're not going to get good reports on jobs," he said.
 "The report was weak, consistent with a soft economy, but
the U.S. is not going back to where it was a few months ago."
 At 9:40 a.m. (1340 GMT), the currency was at C$1.1560 to
the U.S. dollar, or 86.51 U.S. cents, up from C$1.1630 to the
U.S. dollar, or 85.98 U.S. cents, at Tuesday's close.
 Canadian markets were closed on Wednesday for the Canada
Day holiday.
 Canadian bond prices were mixed, with the short end headed
higher on the U.S. jobs decline and an early slump in equity
 Toronto's main stock index opened more than 1 percent lower
[ID:nTOR004717], while U.S. stock indexes also tumbled.
 Longer-dated bonds cut losses following the data. The
losses were in sympathy with U.S. Treasuries, which fell on
Wednesday, while the Canadian market was closed, due to
resurfacing supply concerns at the start of third quarter.
 The benchmark two-year government bond rose 6 Canadian
cents to C$100.14 to yield 1.175 percent, while the 10-year
bond was off 7 Canadian cents at C$103.13 to yield 3.375
 The 30-year bond fell 30 Canadian cents to C$119.10 to
yield 3.874 percent. The comparable U.S. issue yielded 4.339
 (Reporting by Ka Yan Ng; editing by Peter Galloway)