CANADA FX DEBT-Canada dollar retreats from parity on weak jobs
* C$ slumps to C$1.0058 or 99.42 U.S. cents
* Canada March jobs data lower than expected
* Bond prices higher across the curve
By Claire Sibonney
TORONTO, April 9 (Reuters) - The Canadian dollar extended its decline against its U.S. counterpart on Friday after a weaker-than-expected reading of Canadian jobs quelled some speculation that Canadian interest rates may soon rise.
Canada's economy added a lower-than-expected 17,900 jobs in March with part-time job gains offsetting full-time job losses. The unemployment rate remained unchanged at 8.2 percent. [ID:nN09253705]
Expectations had been for an increase of 25,000 jobs and an unemployment rate of 8.2 percent.
At 7:52 a.m. (1152 GMT), the Canadian dollar CAD=D3 was at C$1.0058 or 99.42 U.S. cents, down from Thursday's close at C$1.0028 or 99.72 U.S. cents. Before the data was released, the Canadian currency was above par at C$0.9996 or $1.0004.
But economists insisted the data was still good news for Canada's economy.
"When you consider that employment is trending up and providing fuel for consumer spending, it bodes well for the economic outlook," said Sal Guatieri, senior economist at BMO Capital Markets.
"The Canadian dollar has backed off a little bit on the report but I'm not sure its weakness will be sustained in the face of generally positive economic numbers for Canada."
Market watchers say the data is unlikely to change the view that the Bank of Canada is set to raise interest rates sooner rather than later.
The Bank of Canada has made a conditional pledge to hold its key interest rate at a record low of 0.25 percent until the end of June, provided inflation stays tame.
"This still is very much in line with the Bank of Canada raising rates beginning in July, which the market has fully priced in," said Avery Shenfeld, chief economist at CIBC World Markets.
"It wasn't a barn burner report. There were certainly some who were looking for a stronger number based on the absence of stormy weather in Canada in March but it doesn't dramatically alter the fundamentals for the currency."
Offsetting the weaker than expected jobs numbers, oil rose above $86 to near 18-month highs to support the commodity-linked currency, as positive U.S. economic indicators and rallying equities lifted expectations for sustained energy demand growth in the world's number one energy-consuming country. [O/R]
Canadian bond prices rose after the report, moving in the same direction as U.S. Treasuries, which found some support in Europe. [US/]
"The advantage for the bond market is that it doesn't suggest that the Bank of Canada has to move ahead of July and the market was starting to put some odds on a June hike that this report does not provide any support for," added Shenfeld.
The two-year government bond CA2YT=RR rose 10 Canadian cents at C$99.42 to yield 1.814 percent, while the 10-year bond CA10YT=RR jumped 13 Canadian cents to C$100.650 to yield 3.666 percent. (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)
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