CANADA FX DEBT-C$ falls as jobs data, Carney shed no light

Fri Sep 10, 2010 4:35pm EDT
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   * C$ retreats from three-week high to 96.61 U.S. cents
 * Bond prices flat to lower
 * Canada adds 35,800 jobs in August
 (Updates to close)
 TORONTO, Sept 10 (Reuters) - The Canadian dollar dipped
against the U.S. dollar on Friday, while bonds were flat to
lower after Canada's August jobs report and comments by Bank of
Canada Governor Mark Carney failed to solve the puzzle of
monetary-policy direction.
 The headline figure for the jobs data came in stronger than
expected and the currency immediately rallied. But the move was
short-lived as the details of the data were considered soft,
suggesting the recovery's momentum had slowed. A speech and
subsequent comments by Carney later in the session did not shed
new light on the path of monetary policy.
  From a high of C$1.0287 to the U.S. dollar, or 97.21 U.S.
cents, touched immediately after the publication of the jobs
report, the currency slipped as low as C$1.0375 to the U.S.
dollar, or 96.39 U.S. cents.
 It finished at C$1.0351 to the U.S. dollar, or 96.61 U.S.
cents, down from Thursday's finish of C$1.0337, or 96.74 U.S.
 The two-year Canada bond CA2YT=RR was up 1 Canadian cent
to yield 1.462 percent, while the 10-year bond CA10YT=RR
slipped 9 Canadian cents to yield 3.102 percent.
 "I think the jobs data was viewed as fairly mixed and
Carney's speech really didn't give us a lot of meat to delve
into in terms of near term, so I think you can combine those
things and it all creates a Canada day that is leaving us very
close to where we closed yesterday," said Camilla Sutton, chief
currency strategist at Scotia Capital.
 Canada's economy added 35,800 jobs in August, slightly more
than the consensus forecast. The headline number left an
initial impression that the labor market was picking up a
little steam. [ID:nN10243874]
 But the details told a different tale. Excluding the
volatile education component, monthly employment actually lost
some 32,000 jobs, while private-sector jobs declined for a
second month in a row.
"The majority of industries actually saw declines of
employment in the month. The initial reaction has been to bid
the Canadian dollar stronger, but I think after the details are
digested, it might be seen as a bit of a disappointment," said
Doug Porter, deputy chief economist at BMO Capital Markets.
 Analysts said the numbers did little to sway expectations
regarding the Bank of Canada's next interest rate decision in
 The central bank nudged its overnight rate target up by 25
basis points to 1 percent on Wednesday and, contrary to most
economists' expectations, did not signal a subsequent pause in
rate hikes. Most primary dealers polled by Reuters, however,
see a pause for the remainder of the year. [ID:nN08241537]
 Market pricing, as measured by a Reuters calculation of
yield on overnight index swaps, indicated about a 64 percent
likelihood of no change in interest rates at the Bank of
Canada's policy-decision date next month. BOCWATCH
 Carney, in Alberta at a conference with other top
policymakers, warned the global recovery was at risk. In a
speech highly critical of global leaders' track record in
coordinating policies, Carney blasted proposals to replace the
U.S. dollar as the world's reserve currency. [ID:nN10251216]
  (Reporting by Ka Yan Ng, Claire Sibonney and Euan Rocha;
editing by Peter Galloway)