CANADA FX DEBT-C$ hits one-year high after surprising jobs gain

Fri Oct 9, 2009 8:29am EDT
 
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 * Canada jobs gains six times more than expected
 * C$ charges to highest level since Sept. 2008
 * Bond prices soften after data; lower across the curve
 By Frank Pingue
 TORONTO, Oct 9 (Reuters) - The Canadian dollar raced to a
one-year high on Friday as domestic jobs data that humbled
forecasts ignited talk about whether the Bank of Canada will be
forced to break its conditional pledge and raise rates sooner
than expected.
 Canada's currency shot to C$1.0423 to the U.S. dollar, or
95.94 U.S. cents, its highest level since Sept 2008, after data
showed Canada's economy created 30,600 jobs in September, six
times more than expected. [ID:nN09253705]
 Helping to power the latest rally in the domestic currency
was talk about whether Canada's central bank may opt to forfeit
its conditional pledge to keep rates at their historic low of
0.25 percent at least until the end of June 2010.
 Talk of central bank rate hikes ramped up this week after
the Reserve Bank of Australia raised its interest rate and
became the first central bank in the Group of 20 nations to
tighten policy as the financial crisis abates. [ID:nSYD520296]
 "The market was looking for a strong report and looking for
a reason to buy the Canadian dollar ... and everybody is now
wondering if this does bring a Bank of Canada rate hike that
much closer," said David Watt, senior currency strategist RBC
Capital Markets.
 "I still think there are some special circumstances to this
report that will leave the Bank of Canada on the sidelines but
the market is wanting to run."
 Beyond the strong headline figure of the report were less
impressive details, Watt suggested. He said sectors tied more
directly to the domestic economy had signs that were "not bad,
but not great."
 In the report, Statistics Canada said net employment gains
in September were all in the public sector while private sector
employment actually lost 17,100 jobs, suggesting big
private-sector losses outside manufacturing and construction.
 At 8:10 a.m. (1210 GMT), the Canadian unit was at C$1.0443
to the U.S. dollar, or 95.76 U.S. cents, up from C$1.0522 to
the U.S. dollar, or 95.04 U.S. cents, at Thursday's close.
 Domestic bond prices, which weakened slightly after the
jobs data, were pinned lower across the curve.
 (Editing by Jeffrey Hodgson)