CANADA FX DEBT-Jobs, commodities lift C$ to 3-1/2 year high

Fri Apr 8, 2011 4:40pm EDT
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 * C$ ends at C$0.9574 vs US$, or $1.0445, 3rd weekly gain
  * Hits high of C$0.9526 vs US$, or $1.05
  * Bond prices lower across curve, track U.S. Treasuries
  * Canada loses jobs in March, but full-time numbers jump
 (Updates to close, adds details, quotes)
  By Claire Sibonney
  TORONTO, April 8 (Reuters) - The Canadian dollar hit its
highest level in more than three years against a broadly weaker
U.S. dollar on Friday, marking its third weekly gain, as
commodity prices rallied and jobs data provided some upbeat
economic news.
 Though Canada surprisingly lost 1,500 jobs in March, a huge
jump in full-time positions suggested solid economic growth and
bolstered expectations the central bank will raise interest
rates later this year, likely in July. [ID:nN08186389]
 Surging oil and gold prices remained key drivers of the
commodity-linked currency, as well as a broadly weaker
greenback. [FRX/] [O/R] [GOL/]
 The currency cut some of its gains however heading into the
close after U.S. stocks fell as high oil prices revived
investor worries about inflation and the economic recovery.
 The Canadian dollar ended the North American session at
C$0.9574 to the U.S. dollar, or $1.0445, up from Thursday's
close of C$0.9585 to the U.S. dollar, or $1.0433.
 It rose for the ninth time in the past ten sessions and was
up 0.7 percent for the week -- its third weekly gain.
 "Obviously, the upward trend in CAD is still quite strong.
And it's not just Canada, we've seen a whole host of currencies
reach new highs today and that just speaks to the broad U.S.
dollar move as opposed to being a CAD specific move," said
Camilla Sutton, chief currency strategist at Scotia Capital.
 "Markets have caught wind that globally central banks are
hiking rates and the (U.S. Federal Reserve) is not.
 The European Central Bank raised rates by 25 basis points
on Thursday, its first increase since the 2008 financial
crisis, and signaled it is ready to tighten further if needed.
 "Interest rate spreads are expected to move further and if
the ECB feels the euro zone is strong enough to handle higher
rates then that's likely true in a lot of countries," added
 Higher rates are also expected in Canada later this year
despite the weak headline number on the jobs report.
 The Bank of Canada is expected to make its first interest
rate hike of 2011 in July, as it balances rising economic
growth against tame inflation and a high-flying Canadian
dollar, according to a Reuters poll on Thursday.
 "I would think at some point you should think more
seriously about May," said Mark Chandler, head of fixed income
and currency strategy at RBC Capital Markets.
 "The real obstacle is not so much the data, but the Bank of
Canada's attitude about it and we find out about their attitude
next week," he added, noting the Monetary Policy Report on
 Following the jobs data, the currency CAD=D4 touched a
high of C$0.9526 to the U.S. dollar, or $1.05, its strongest
since late 2007. The next resistance levels from there are big
round numbers leading to the modern-day high of $1.10, said
 "Ninety-five, ninety-four, ninety-three ... That move was
so fast and we just went down and right back up so there's not
a ton of support (for the U.S. dollar) between here and
 Canadian government bond prices were lower across the
curve, tracking a similar move by U.S. Treasuries, although
they outperformed slightly.
 The employment numbers, the last data available to the Bank
of Canada ahead of its April 12 rate announcement, caused
minimal response, noted Chandler.
 The two-year bond CA2YT=RR was off 3 Canadian cents to
yield 1.901 percent, while the 10-year bond CA10YT=RR was
down 10 Canadian cents to yield 3.449 percent.
  (Reporting by Claire Sibonney; editing by Rob Wilson)