CANADA FX DEBT-C$ pares losses after Canada jobs data
* C$ down but recovers a bit after hitting session low
* Canada unexpectedly loses 6,600 jobs in Sept
* Bonds hold lower ahead of U.S. September jobs report (Adds details)
By Ka Yan Ng
TORONTO, Oct 8 (Reuters) - Canada's dollar fell against the U.S. currency on Friday after the domestic economy unexpectedly lost 6,600 jobs in September, which further cemented views that the Bank of Canada will pause later this month its campaign to raise rates.
Economists said the data's details were not as dire as the overall loss of jobs would suggest. The unemployment rate edged down to 8.0 percent from 8.1 percent in August.
But the downbeat headline of a jobs loss for the month does add to a raft of recent statistics showing the Canadian economy is slowing down after a swift start this year. [ID:nSCL8LE66H] [ID:nN08200613]
"Overall this report is not disastrous. Certainly it supports the growing market participants' view out there that the Bank of Canada will take a pause on Oct. 19," said Sebastien Lavoie, assistant chief economist at Laurentian Bank Securities.
The market is pricing in nearly a 90 percent likelihood that the central bank will hold rates at 1 percent later this month, based on a Reuters calculation of yields on overnight index swaps. BOCWATCH
At 7:55 a.m. (1155 GMT), the Canadian dollar CAD=D4 was at C$1.0218 to the U.S. dollar, or 97.87 U.S. cents, recovering from a session low at C$1.0238 to the U.S. dollar, or 97.68 U.S. cents, hit immediately after the data. It was also weaker than Thursday's close at C$1.0185 to the U.S. dollar, or 98.18 U.S. cents.
"The Canadian dollar seemed to anticipate this by softening up in the hour leading up. Obviously it is fodder for further Canadian dollar weakness, but again, the market may be forced to reconsider the magnitude of that weakness because that negative headline perhaps overstates the true weakness of the report," said Eric Lascelles, chief Canada macro strategist at TD Securities.
Canadian government bond prices showed a muted reaction following the domestic jobs data, with market participants looking ahead to the U.S. nonfarm payrolls report.
A weak jobs report in the United States could boost chances the Federal Reserve will print more money in an effort to support the economic recovery. The data, due at 8:30 a.m., (1230 GMT), is forecast to show the U.S. economy added no jobs in September. ECONUS
The two-year bond CA2YT=RR was off 1 Canadian cent to yield 1.338 percent, while the 10-year bond CA10YT=RR edged down 7 Canadian cents to yield 2.758 percent.
(Editing by Padraic Cassidy)
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