CANADA FX DEBT-C$ rallies after data shows surprise jobs growth

Fri Sep 4, 2009 7:38am EDT
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 * C$ rises to session high C$1.0922 per US$
 * Canada adds 27,100 jobs in August
 * Bond prices lower across curve
 (Adds details and comments)
 By Frank Pingue
 TORONTO, Sept 4 (Reuters) - Canada's currency raced higher
versus the greenback on Friday after data showed the domestic
economy unexpectedly added jobs in August, but the gains will
be tested when a U.S. jobs report arrives shortly.
 The data boosted the Canadian dollar as high as C$1.0922 to
the U.S. dollar, or 91.56 U.S. cents, up from a pre-data level
around C$1.0969 to the U.S. dollar, or 91.17 U.S. cents.
 "From a market perspective we've already seen the impact on
the Canadian dollar significantly stronger," said Matthew
Strauss, senior currency strategist at RBC Capital Markets.
 "We could see some follow though for the next while until
the market starts focusing on the (U.S. jobs data), but as it
stand these numbers are pretty good."
 The data showed Canada's economy unexpectedly added 27,100
jobs in August but the unemployment rate rose to an 11-1/2 year
high of 8.7 percent from 8.6 percent in July. [ID:nN04153956]
 By 7:25 a.m. (1125 GMT), the Canadian dollar had retreated
a touch to C$1.0941 to the U.S. dollar, or 91.40 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.
 The early gains in the Canadian dollar could be put to the
test after the U.S. nonfarm payrolls data due at 8:30 a.m.,
which is expected to show employers in August likely cut jobs
by the least amount in a year, a sign of healing in the labor
market. [ID:nN01485399]
 If the U.S. report comes in worse than expected, there is a
chance traders could unload the Canadian dollar and flock to
the U.S. dollar given its status as a safe haven play.
 Canadian bond prices extended losses following the data,
which lessened the appeal of more secure assets like government
debt. But the moves were limited ahead of the U.S. jobs
 (Editing by Jeffrey Hodgson)