CANADA FX DEBT-C$ weakens on commodities, global worries
* C$ at C$0.9771 to the U.S. dollar, or $1.0234
* Global economic worries offset healthy jobs data
* Bonds higher on growing risk-aversion (Updates with details, comment)
By Solarina Ho
TORONTO, June 10 (Reuters) - The Canadian dollar weakened against a firmer greenback on Friday, paring earlier gains from healthy jobs data, as commodity prices came under pressure and concerns about the global economy weighed.
U.S. crude fell more than $3, retreating below $100 a barrel following news that Saudi Arabia was offering more oil to Asian refiners, easing supply concerns following an inconclusive OPEC meeting on Wednesday.
Adding to the pressure was a stronger U.S. dollar and weaker equity prices. [O/R] [MKTS/GLOB]
The U.S. dollar had also strengthened against the euro as ongoing uncertainty about Greece's debt crisis weighed. [FRX/]
"The new thing is the spreading concern about global growth. While we had the strong Canadian data, which gave the Canadian dollar a lift earlier, these other factors are certainly coming into play," said David Watt, RBC Capital Markets' senior currency strategist.
Watt also noted that some of the commodity prices have slipped below their 200-day moving averages.
"They seem to be more than offseting signs that the domestic side of the Canadian economy is doing relatively well and likely needs higher interest rates, but the (central) bank's not going to move so long as the global conditions remain tenuous."
At 10:36 a.m. (1436 GMT), the currency CAD=D4 stood at C$0.9771 to the U.S. dollar, or $1.0234, down from Thursday's close at C$0.9731 to the U.S. dollar, or $1.0276.
Earlier in the session, the currency had risen as high as C$0.9711 to the U.S. dollar, or $1.0298 -- its firmest level since June 1 -- following a better than expected domestic employment report.
The 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. [ID:nN10172943]
That was slightly better than the 20,000 jobs expected by analysts, who also predicted the unemployment 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 Markets.
"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."
Overnight index swaps, which trade based on expectations for the Bank of Canada's key policy rate, showed that just after the data investors priced in slightly higher odds of tightening at policy announcements in September, October and December. [BOCWATCH]
Expectations of tightening later weakened as commodity and stock prices tumbled more than 1 percent.
The bank is widely expected to raise interest rates in September, according to a May 31 poll of primary dealers. [CA/POLL]
Canadian bond prices, which were mixed earlier, were higher across the curve as worries about the global economic recovery sent investors toward lower-risk government debt.
The two-year bond CA2YT=RR was up half a Canadian cent to yield 1.437 percent, while the 10-year bond CA10YT=RR added 28 Canadian cents to yield 3.004 percent. (Editing by Rob Wilson)
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