CANADA FX DEBT-C$ falls as U.S. data sparks rate worries

Fri Dec 4, 2009 3:32pm EST
 
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 * Canadian dollar slides to 94.43 U.S. cents
 * Canada adds 79,000 jobs in November
 * Bond prices lower across the curve
 (Recasts, adds details and quotes)
 By Jennifer Kwan
 TORONTO, Dec 4 (Reuters) - The Canadian dollar fell against
the U.S. currency on Friday, squeezed by weak commodity prices
and a surging greenback, which climbed on employment data that
showed the U.S. shed far fewer jobs than expected.
 Initially, the U.S. numbers helped to boost global equity
markets and the Canadian currency climbed as high as C$1.0433
to the U.S. dollar, or 95.85 U.S. cents.
 But as the surprisingly strong employment data boosted
hopes that a recovery was in the making, it also raised the
possibility the U.S. Federal Reserve could move to raise
interest rates sooner than expected, said George Davis, chief
technical strategist at RBC Capital Markets.
 "There are a couple of opposing forces that have been sort
of pushing the market today," he said.
 "Today's number has some people sort of guessing as to
whether or not the Fed is going to be looking to hike rates
sooner rather than later," Davis said.
 "Because of that, we've seen the (U.S.) dollar basically
rally aggressively across the board and that has been the main
factor that has taken dollar/Canada off the lows."
 U.S. employers cut just 11,000 jobs in November, far fewer
than expected, while the U.S. unemployment rate fell to 10
percent. [ID:nN03103070]
 An earlier report report showed Canada's economy created
far more jobs than expected in November and the unemployment
rate fell, suggesting a recovery is in the making.
 Statistics Canada reported a net employment gain of 79,000
jobs, beating analysts expectations of a 15,000 gain. The
unemployment rate edged lower to 8.5 percent from 8.6 percent
in October. Analysts had expected a rise to 8.7 percent.
[ID:nN04141170]
 Market watchers also said the report's details were strong,
with full-time employment rising by 39,000, with some 40,000
jobs added to part-time payrolls. The employment market was
strongest in the services sector, with the largest growth in
education.
 At 3:03 p.m. (2003 GMT), the Canadian dollar was at
C$1.0590 to the U.S. dollar, or 94.43 U.S. cents, down from
Thursday's finish at C$1.0547 to the U.S. dollar, or 94.81 U.S.
cents.
 The price of crude, a key Canadian export, weighed on the
currency, falling below $76 a barrel, due in part to the
stronger U.S. dollar, while gold prices fell below $1,150 an
ounce. [O/R] [USD/] [GOL/]
 BOND PRICES LOWER
 Canadian bond prices were lower across the curve following
the jobs data, but the selling began on both sides of the
border even before the release of the employment reports,
analysts said.
 "Better than expected jobs reports might feed ... stronger
than expected near-term growth views. But at the same time the
take back is that it makes markets nervous that perhaps central
bankers are going to take the punch bowl away earlier than
expected," said Derek Holt, an economist at Scotia Capital.
 The two-year government bond CA2YT=RR was down at C$99.57
to yield 1.265 percent, while the 10-year bond CA10YT=RR
slipped 95 Canadian cents to C$118.10 to yield 3.918 percent.
 (Editing by Rob Wilson)
 ((jennifer.kwan@thomsonreuters.com; +1 416 941 8178; Reuters
Messaging: jennifer.kwan.reuters.net@reuters.com))  
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FOR CANADIAN MARKETS NEWS, CLICK ON CODES IN BRACKETS:
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Headlines from global forex markets ...[FXNEWS]
Bank of Canada weekly t-bill auction...[CA/BIL]
Bank of Canada securities auctions.....[CA/AUC]
Bank of Canada interest rate story.....[CA/INT]
Reuters monthly Canadian dollar poll..FOREXPOLL33 [CAD/POLL]
Canadian interest rate poll...........[CA/POLL]
Reuters G7 quarterly economy poll....[ECILT/CA]
Weekly economic data poll......[ECI/CA][ECI/CI]
Reuters global stocks poll (Canada)...EQUITYPOLL5 [EPOLL/CA]
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Today in Canada.......[CA/DIARY]
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Real-time Canadian economic RICS.......ECONCA
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Canadian bonds quote..CDBN<0#CABMK=>CABONDT
Canadian money market quote...CDMN<0#CAMMKT=>
Canada-Treasury spread rates........<CA/SPREAD>
Canadian Debt and Forex speed guide...........<CA/DEBT><CAD/1>
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