CANADA FX DEBT-C$ little changed after US, Canada jobs data
* 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 recovery.
"The Canadian numbers weren't great but they were superseded by the horrible U.S. numbers.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 again.
"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)
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