CANADA FX DEBT-C$ little changed after US, Canada jobs data

Fri Oct 8, 2010 10:08am EDT
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 * C$ steadies after big swings after data
 * Canada unexpectedly loses 6,600 jobs in Sept
 * Bonds turn higher after U.S. Sept jobs report
 (Adds details)
 By Ka Yan Ng
 TORONTO, Oct 8 (Reuters) - The Canadian dollar was little
changed on Friday morning after some big swings early in the
day as the market digested U.S. and Canadian jobs reports that
both came in worse than expected.
 The Canadian dollar initially dropped after data showed
Canada unexpectedly lost 6,600 jobs in September, further
cementing views that the Bank of Canada will refrain from
raising interest rates later this month.
 It then turned positive briefly after worse-than-expected
U.S. jobs data spurred market belief that the U.S. Federal
Reserve will likely take more action to support an economic
 "The Canadian numbers weren't great but they were
superseded by the horrible U.S. numbers. The market is taking
this as a sign that the Fed will have to embark on another
round of quantitative easing, thereby providing a greater
access to cheap funds," said John Curran, senior vice president
at CanadianForex.
 "So people are adding risk to their profiles."
 Economists said the details in the Canadian jobs report
were not as dire as the overall loss of jobs would suggest. The
unemployment rate actually edged down to 8.0 percent in
September 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 to the 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 (from raising rates) 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 9:30 a.m. (1330 GMT), the Canadian dollar CAD=D4 was
at C$1.0183 to the U.S. dollar, or 98.20 U.S. cents, recovering
from a low of C$1.0238 to the U.S. dollar, or 97.68 U.S. cents,
hit immediately after the domestic jobs data.
 It was nearly unchanged from Thursday's close at C$1.0185
to the U.S. dollar, or 98.18 U.S. cents. It rose to C$1.0157 to
the U.S. dollar, or 98.45 U.S. cents, after the release of the
U.S. data.
 Earlier this week, the currency hit a five-month high and
got the market talking about parity with the U.S. dollar
 "The Canadian dollar is probably going to have to grind its
way towards par because it will lag the other currencies just
due to proximity and reliance to the U.S.," Curran said.
 Canadian government bond prices all moved higher across the
curve after the U.S. nonfarm payrolls report, which showed the
U.S. economy shed 95,000 jobs in September for a fourth
straight month of job losses. Analysts polled by Reuters had
expected overall payrolls would be unchanged. [ID:nN08205203]
 The two-year bond CA2YT=RR was up 2 Canadian cents to
yield 1.322 percent, while the 10-year bond CA10YT=RR
advanced 35 Canadian cents to yield 2.710 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)