CANADA FX DEBT-C$ falls, risk sentiment turns on data, Japan

Fri Mar 11, 2011 8:19am EST
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 * C$ falls to lowest since Feb. 28
 * Short-dated bond prices extend gains
 * Canada adds 15,100 jobs vs forecast of 21,000 gain
 * Unemployment rate steady at 7.8 percent
 * Japan earthquake, Middle East, data drags on sentiment
 (Adds details)
 By Ka Yan Ng
 TORONTO, March 11 (Reuters) - Canada's dollar slipped to a
its lowest in nearly two weeks against the U.S. dollar, while
bonds added to gains on Friday morning after data showed job
creation slowed more than expected in February.
 The data firmed expectations that the Bank of Canada has
room to breathe before it next raises interest rates.
 The Canadian dollar was already weakening ahead of the
country's jobs data after a massive earthquake hit Japan,
darkening an already bleak mood caused by weak economic data
and unrest in Saudi Arabia.  [MKTS/GLOB]
 The Canadian dollar CAD=D4 fell as low as C$0.9791 to the
U.S. dollar, or $1.0213, its lowest since Feb. 28, following
data that showed Canada's economy added 15,100 jobs in
February. The unemployment rate was unchanged at 7.8 percent in
 Analysts surveyed by Reuters had expected the economy to
add 21,000 jobs in February and the unemployment rate to dip to
7.7 percent. [ID:nN11228750] ECONCA
 "This kind of number certainly gives (the Bank of Canada)
additional patience to wait further. At this point our call for
September for the first hike appears OK," said Sebastien
Lavoie, assistant chief economist at Laurentian Bank
 Overnight index swaps, which trade based on expectations
for the central bank rate, showed investors see a 99.12 percent
probability rates will stay on hold April 12, compared with
91.91 percent before the data. BOCWATCH
 The September rate-setting meeting continued to imply the
first fully priced-in increase in interest rates. The central
bank has left its key rate unchanged at a still-low 1 percent
since September after three consecutive rate increases last
 Risk sentiment will be further tested by a pair of U.S.
reports this morning, retail sales for February and the Thomson
Reuters/University of Michigan consumer confidence survey for
 "We're looking here for perhaps a softer outturn for retail
sales as well as consumer confidence. That is likely to weigh
on investors today and we don't expect this to be a very
positive day for risk assets," said David Tulk, chief Canada
macro strategist at TD Securities. 
 By 8:05 a.m. (1305 GMT), the Canadian dollar had pared
losses to C$0.9780 to the U.S. dollar, or $1.0225, down from
Thursday's North American session close at C$0.9756 to the U.S.
dollar, or $1.0250.
 The rate-sensitive two-year Canadian government bond
CA2YT=RR rose 7 Canadian cents to yield 1.739 percent, while
the 10-year bond CA10YT=RR advanced 7 Canadian cents to yield
3.260 percent.
 (Reporting by Ka Yan Ng; Editing by Chizu Nomiyama)