CANADA FX DEBT-C$ ends week on higher note, boosted by jobs

Fri Nov 7, 2008 4:39pm EST
 
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 * C$ rallies after headline jobs number tops estimates
 * C$ snaps losing skid, ends week 1.4 percent higher
 * Bonds end flat but off session lows
 By Frank Pingue
 TORONTO, Nov 7 (Reuters) - The Canadian dollar ended higher
on Friday and snapped a two-session losing skid after data
showed the Canadian economy unexpectedly added jobs in October,
although many of the jobs were special hires for the Oct. 14
federal election.
 Canadian bond prices reversed early losses after the jobs
data and finished flat to higher across the curve as nagging
concerns about a global recession convinced dealers to grab
hold of more secure government debt ahead of the weekend.
 The Canadian dollar closed at C$1.1880 to the U.S. dollar,
or 84.18 U.S. cents, up 0.3 percent from C$1.1916 to the U.S.
dollar, or 83.92 U.S. cents, at Thursday's close.
 For the week, the Canadian dollar rose 1.4 percent.
 Despite the election-related gains, the headline jobs
number showed the economy added 9,500 jobs in October and was
comfortably above expectations that Canada had shed 10,000
positions. And that was enough to prompt a rally in the
Canadian dollar.
 Adding to the gains was a slide in the U.S. dollar versus a
number of major currencies after U.S. data showed the economy
shed many more jobs than expected, while the jobless rate moved
to a 14-year high.
 "The Canadian data was positive for the Canadian dollar and
it does suggest that for right now at least the big job losses
are not apparent," said Charmaine Buskas, senior economics
strategist at TD Securities.
 "At the same time we did see a pretty big U.S. dollar
selloff on the back of a bit weaker-than-expected payrolls
number, so that combination created a little bit of support for
the Canadian dollar."
 Total job creation in Canada for October was a far cry from
September, when 106,900 jobs were added, but it still followed
scores of data this week from around the world that suggest a
global recession could be more prolonged than had been
thought.
 Despite some impressive data on the Canadian economy, three
of Canada's biggest banks forecast the Canadian economy will
enter a mild recession next year.
 The next big figures due out of Canada will come from the
housing report on Monday. It is expected to show housing starts
dropped 8 percent in October to a seasonally adjusted
annualized 200,000 units from 217,600 in September.
 BOND PRICES REBOUND
 Canadian bond prices either finished higher or comfortably
off their session lows as dealers, with concerns about a global
recession still on their minds, moved into more secure assets
going into the weekend.
 An early slide in bond prices was due largely to renewed
demand for equities at the start of the North American session,
but that move was mostly undone.
 The two-year bond slipped 1 Canadian cent to C$101.70 to
yield 1.902 percent. The 10-year bond rose 27 Canadian cents to
C$104.32 to yield 3.708 percent.
 The yield spread between the two- and 10-year bond was 181
basis points, down from 185 basis points at the previous close
 The 30-year bond rose 7 Canadian cents to C$112.77 to yield
4.225 percent. In the United States, the 30-year Treasury
yielded 4.259 percent.
 (Editing by Peter Galloway)