CANADA FX DEBT-C$ falls after jobs surprise, eye on U.S. data

Fri Jan 8, 2010 7:56am EST
 
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 * C$ drops to C$1.0367 after weak Canadian jobs report
 * Bonds lower ahead of U.S. jobs report
 By Jennifer Kwan
 TORONTO, Jan 8 (Reuters) - The Canadian dollar fell against
the U.S. currency on Friday morning after domestic employment
data surprised the market with a small loss in December.
 The report showed Canada's labor market recovery stalled
last month, unexpectedly losing 2,600 jobs after hefty gains in
November, according to Statistics Canada data released on
Friday. [ID:nN08233091]
 "The gain on employment (was) weaker than expected so
likely near-term to put some downward pressure on Canada as it
suggests the Bank of Canada is going to be in no rush to start
tightening interest rates," said Paul Ferley, assistant chief
economist, Royal Bank of Canada.
 The unemployment rate held steady at 8.5 percent, as
forecast in a Reuters poll. The job losses, which followed a
gain of 79,000 jobs in November, are small enough to be
considered a flat reading, but disappointed the market
consensus for a 20,000 increase.
 At 7:31 a.m. (1231 GMT), the Canadian dollar was at
C$1.0367 to the U.S. dollar, or 96.46 U.S. cents, down from
Thursday's North American finish at C$1.0350 to the U.S.
dollar, or 96.62 U.S. cents.
 The Canadian dollar fell as low as C$1.0386 or 96.28 U.S.
cents, from C$1.0314 or 96.96 cents just before the report. On
Thursday it had hit a 2 1/2 month high of C$1.0291, or 97.17
U.S. cents.
 "We've become used to high-side surprises for Canadian
employment over the last six months so it'll be a bit of a
disappointment for the Canadian dollar, but I think the
non-farm payroll report today is probably going to be the
bigger driver," said Doug Porter, deputy chief economist, BMO
Capital Markets.
 U.S. jobs figures due at 8:30 a.m. (1330 GMT) are expected
to show the economy stopped shedding jobs last month for the
first time since it slid into recession two years ago.
[ID:nN0747110]
 "(The U.S. jobs data) could have greater bearing in terms
of how foreign exchange markets trade via impact on the U.S.
dollar," said Ferley.
 The price of oil [O/R], a key Canadian export, slipped to
around $82.50 a barrel, while gold prices also softened.
[GOL/]
 Canadian bond prices were lower, following U.S. Treasuries
where prices fell in Europe on Friday as markets held their
breath ahead of U.S. payrolls data expected to show an
improvement in the labour market. [US/]
 Still, the yield on the 2-year Canadian government bond
fell to 1.401 percent from 1.412 percent just before the
Canadian data came out.
 (With additional reporting by Claire Sibonney; Editing by
Jeffrey Hodgson)