CANADA FX DEBT-C$ jumps on Canada jobs data, focus turns to U.S.

Fri Feb 4, 2011 8:06am EST
 
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 * C$ hits session high, pares gains
 * Bonds sink across the curve
 * Canada adds 69,200 jobs vs forecast of 15,000 gain
 * Next up: U.S. non-farm payrolls for January ECONUS
 (Adds details)
 By Ka Yan Ng
 TORONTO, Feb 4 (Reuters) - The Canadian dollar was higher
against the U.S. dollar on Friday, while bonds sank, after
Canada's economy added more than four times more jobs than
expected in January.
 The currency CAD=D4 hit a session high at C$0.9845 to the
U.S. dollar, or $1.0157, up sharply from C$0.9890 to the U.S.
dollar, or $1.0111, just before the data was published.
 By 7:40 a.m. (1240 GMT), it had pared gains to sit at
C$0.9858 to the U.S. dollar, or $1.0144, and was still firmer
than Thursday's North American session close at C$0.9910 to the
U.S. dollar, or $1.0091.
 The economy added 69,200 jobs in January, against a
forecast of 15,000 job gain, led by hiring in the services
sector. The unemployment rate edged up to 7.8 percent from 7.6
percent in December as more people sought work, according to
Statistics Canada data. [ID:nSCL4DE790]
 The figures also pushed Canadian bond prices into negative
territory, particularly the short-dated interest-rate sensitive
front end, as investors considered the Bank of Canada may start
raising interest rates sooner than expected.
 "I find the Bank of Canada doesn't tend to overreact much
to one month's job figures. They'll certainly take note of this
but they'll also note the point that the unemployment rate
backed up by a couple tenths of a percent. So it wasn't a
completely one-sided show of force," said Doug Porter, deputy
chief economist at BMO Capital Markets.
 "As a stand alone report there's no question about it, it's
very supportive for the currency."
  The two-year bond CA2YT=RR was off 12 Canadian cents to
yield 1.828 percent, while the 10-year bond CA10YT=RR dropped
35 Canadian cents to yield 3.468 percent.
 Market players now turn to the U.S. non-farm payrolls data
for January, due at 8:30 a.m. EST. The median of forecasts from
analysts polled by Reuters is for employers to have added
145,000 jobs last month after adding 103,000 jobs in December.
They also expect the jobless rate to have edged up to 9.5
percent from 9.4 percent. [ECI/US]
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)