CANADA FX DEBT-C$ backs off early gain but stays higher

Fri Sep 4, 2009 9:58am EDT
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 * C$ backs off early session high
 * Canada adds 27,100 jobs in August
 * Bond prices lower across curve
 By Frank Pingue
 TORONTO, Sept 4 (Reuters) - Canada's currency was higher
against the greenback on Friday morning but most of the early
gains it made on upbeat Canadian and U.S. jobs data unraveled
as appetite for risk diminished ahead of the long weekend.
 The Canadian dollar was given an early boost after a report
showed the Canadian economy unexpectedly added 27,100 jobs in
August even though the unemployment rate rose to an 11-1/2 year
high of 8.7 percent. [ID:nN04153956]
 It then hit a high of C$1.0885 to the U.S. dollar, or 91.87
U.S. cents, after U.S. data showed employers cut
fewer-than-expected jobs in August. [ID:nN03530870]
 But the U.S. report also showed unemployment jumped to the
highest level in 26 years, which helped lure traders back to
the greenback due to its status as a safe-haven play.
 By 9:40 a.m. (1340 GMT), the Canadian dollar had fallen
back to C$1.0933 to the U.S. dollar, or 91.47 U.S. cents, which
was still up from C$1.1033 to the U.S. dollar, or 90.64 U.S.
cents, at Thursday's close.
 "I really think the market is going to be a bit risk averse
just in terms of not wanting to carry too much into a long
weekend," said Steve Butler, director of foreign exchange
trading at Scotia Capital.
 "So by noon or 1 o'clock most of the markets should calm
down, but that doesn't mean that we can't still see some pretty
decent swings just as people try to square up going into a long
 Financial markets in Canada and the United States will be
closed on Monday for Labor Day.
 Canadian bond prices were lower across the curve as the
pair of jobs reports lessened the appeal of secure government
 Analysts felt the domestic data was not expected to have
much effect on the Bank of Canada, which has pledged to hold
benchmark interest rates at a record low of 0.25 percent at
least through June 2010 as long as inflation stays in check.
 The two-year bond CA2YT=RR was down 5 Canadian cents at
C$99.46 to yield 1.277 percent, while the 10-year bond
CA10YT=RR shed 30 Canadian cents to C$103.07 to yield 3.376
 The 30-year bond CA30YT=RR slipped 40 Canadian cents to
C$118.60 to yield 3.896 percent.
 (Editing by Peter Galloway)