CANADA FX DEBT-C$ higher as strong building permits data boosts
* Canadian dollar up 94.73 U.S. cents
* Bond prices higher across curve (Recasts, adds quote)
By Jennifer Kwan
TORONTO, Dec 7 (Reuters) - The Canadian dollar rose against the U.S. currency on Monday morning, lifted by domestic data that showed building intentions soared past analysts' expectations in October.
Statistics Canada said on Monday the value of building permits shot up 18 percent from September due largely to strength in nonresidential projects. Analysts in a Reuters poll had forecast, on average, a mere 1 percent rise in the value of building permits in October. [ID:nN073438]
"We did have some pretty nice looking economic data at 8:30 in Canada and that might be doing some of the driving," said Eric Lascelles, chief economics and rates strategist at TD Securities. "No one had expected a number anywhere close to that."
At 9:21 a.m. (1421 GMT), the Canadian dollar was at C$1.0556 to the U.S. dollar, or 94.73 U.S. cents, up from Friday's finish at C$1.0579 to the U.S. dollar, or 94.53 U.S. cents.
Lascelles said the building permits report added to Friday's robust jobs reading, which saw the economy add 79,000 jobs in November, five times more workers than expected in the month in a stunningly upbeat jobs report that fueled expectations of a pickup in economic growth. [ID:nN04141170]
"With the Bank of Canada decision coming out tomorrow this is very much an opportune time to bet on Canada if you think it's going to translate into central bank action," he said.
Still, the Bank of Canada is widely expected to keep its hands off interest rates on Tuesday, holding them at near zero and committing to do so until at least July, despite growing evidence the economy is kicking back to life. [ID:nN07158839]
Earlier in the morning, the Canadian currency was weaker, weighed down by soft commodity prices and as the greenback gained on investors expectations U.S. interest rates could rise sooner than previously expected.
Oil fell to below $75 a barrel on Monday while gold prices were also lower. [O/R] [GOL/]
The dollar hit a five-week high against a currency basket on Monday, extending its rally from Friday when stronger-than-expected U.S. jobs data fueled speculation the Federal Reserve may consider winding down its stimulus measures sooner than had been expected. [FRX/]
"We've seen Fed fund futures starting to price in the possibility of a hike even by the middle of (2010)," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"On the back of those expectations following the job numbers the U.S. dollar is really benefiting."
The data showed U.S. employers cut a far fewer-than-expected 11,000 jobs in November, well below expectations of a 130,000 loss, while the unemployment rate fell to 10 percent. [ID:nN04320079]
BONDS EDGE HIGHER
Canadian bond prices inched higher across the curve, tracking U.S. Treasuries which steadied after Friday's sell-off on the jobs data. [US/]
The two-year government bond CA2YT=RR was up about 3 Canadian cents at C$99.99 to yield 1.255 percent, while the 10-year bond CA10YT=RR climbed 8 Canadian cents to C$103.55 to yield 3.31 percent. (Editing by Jeffrey Hodgson)
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