CANADA FX DEBT-C$ touches highest since June 1 after jobs data

Fri Jun 10, 2011 8:30am EDT
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   * C$ at C$0.9727 to the U.S. dollar, or $1.0280
 * Canadian jobs growth stronger than expected
 * Bonds mixed across curve
 By Solarina Ho
 TORONTO, June 9 (Reuters) - The Canadian dollar powered to
its strongest level since the beginning of June against the
greenback following the release of better-than-expected
domestic employment data on Friday.
 Canada's unemployment rate fell to 7.4 percent in May from
7.6 percent as 22,300 jobs were added, marked by a solid shift
toward full-time, private-sector employment, according to
Statistics Canada data.
 This was slightly better than the 20,000 jobs expected by
analysts, who also predicted the jobless rate would remain at
7.6 percent.
 "There were certainly fears out there that after such a big
job gain in April, we might even see a flat or declining figure
for May," said Avery Shenfeld, chief economist at CIBC World
 "The fact that we really held onto to the gains in the
prior month in paid employment and gained some self-employment
jobs was a plus."
 At 7:29 a.m. (1129 GMT), the currency CAD=D4 stood at
C$0.9727 to the U.S. dollar, or $1.0280, stronger than
Thursday's North American finish of C$0.9731 to the U.S.
dollar, or $1.0276. It had strengthened to as high as C$0.9711,
or $1.0298, just after the report, its firmest level since June
 "The dollar is getting I think increasingly more
comfortable with the view that the Bank of Canada will be
raising interest rates and that environment looks likely to
continue to support the Canadian dollar," said Royal Bank of
Canada Chief Economist Craig Wright.
 Overnight index swaps, which trade based on expectations
for the Bank of Canada's key policy rate, showed investors
pricing in slightly higher odds of tightening at policy
announcements in September, October and December.
 The Bank of Canada is widely expected to raise interest
rates in September, according to a May 31 poll of primary
dealers. [CA/POLL]
 Canadian money market and short term bond yields were
mixed, though bond prices were most softer than just before the
jobs data
 The two-year bond CA2YT=RR was down 3 Canadian cents to
yield 1.457 percent, while the 10-year bond CA10YT=RR added 9
Canadian cents to yield 3.026 percent.
 (With additional reporting by Pav Jordan and Euan Rocha;
Editing by Jeffrey Hodgson)