CANADA FX DEBT-C$ slips on growth fears, jobs data

Fri Sep 9, 2011 8:28am EDT
 
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 *C$ at C$0.9928 vs US$, or $1.0073
 *Bond prices cut losses, outperform Treasuries
 (Updates with details, commentary)
 By Claire Sibonney
 TORONTO, Sept 9 (Reuters) - The Canadian dollar weakened  
against the U.S. dollar on Friday, as fears about U.S. and
European growth hurt risk sentiment and domestic employment
data showed Canada was not immune to a deteriorating global
outlook.
  Canada's economy surprised markets by reporting 5,500 net
job losses in August, overshadowing other signs the economy was
making a comeback after a bleak second quarter, and keeping
central bank rate hikes off the table. [ID:nN1E78804B]
   A Reuters poll of primary dealers on Wednesday indicated
the Bank of Canada will not raise interest rates until the
third quarter of 2012. [CA/POLL]
 "It's modestly disappointing so (the Canadian dollar)
should be somewhat weaker on this report, but to be fair, most
of the impetus both for interest rates and currency is likely
to be driven more by overall risk appetite and what's happening
abroad," said Mark Chandler, head of fixed income and currency
strategy at RBC Capital Markets.
 The Canadian dollar was already softer heading into the
report, driven by concern that a U.S. plan to stimulate jobs
will be held up in Congress and after the European Central Bank
dropped its tightening bias and forecast lower growth in the
debt-plagued euro zone. [MKTS/GLOB] [FRX/]
 At 7:57 a.m. (1157 GMT), the Canadian dollar stood at
C$0.9928 to the U.S. dollar, or $1.0073, down from Thursday's
North American session close at C$0.9880 to the U.S. dollar, or
$1.0121.
 The currency CAD=D4 dropped to a session low of C$0.9951
against the U.S. dollar, or $1.0049 immediately following the
jobs report but recovered somewhat after investors digested
some of the positive details, such as a gain of 25,700
full-time jobs.
 "We still, for eight months of the year, had very steady,
significant full-time job growth," said Chandler. He noted the
unemployment rate edged up, but at 7.3 percent it was only 0.1
percentage point away from its ten-year average.
 Canadian bond cut earlier losses, outperforming U.S.
Treasuries across the curve. [US/].
 The two-year bond CA2YT=RR was up 4 Canadian cents to
yield 0.867 percent, while the 10-year bond CA10YT=RR was
down 4 Canadian cents to yield 2.220 percent.
(Additional reporting by Alison Martell, Editing by Chizu
Nomiyama)