CANADA FX DEBT-C$ strengthens ahead of jobs data
(Adds strategist comment, updates prices) * Canadian dollar at C$1.3108, or 76.29 U.S. cents * Bond prices mostly higher across the maturity curve By Alastair Sharp TORONTO, Aug 6 (Reuters) - The Canadian dollar strengthened versus its U.S. counterpart on Thursday, with trading muted ahead of both Canadian and U.S. employment reports due on Friday. The move came despite a fall in the price of oil , a major Canadian export, as the greenback pulled back against most major currencies. "It's a bit of consolidation heading into tomorrow's employment report," said Greg Moore, senior currency strategist at Royal Bank of Canada. "We're essentially in the range of the moves this week." The loonie, as Canada's currency is colloquially known, has weakened steadily since mid-June and has mostly traded between C$1.31 and C$1.32 so far this week, near 11-year lows. It ended the North American session trading at C$1.3108 to the greenback, or 76.29 U.S. cents, compared to Wednesday's close of C$1.3188, or 75.83 U.S. cents. Moore said the loonie would likely weaken by a couple of cents through the remainder of 2015 before improving next year as oil picks up and Canada's economy recovers, giving the Bank of Canada scope to raise borrowing costs after two 2015 cuts. A strong print on the U.S. jobs data would bolster the assumption the Federal Reserve will hike U.S. rates starting in September, which would make the Canadian dollar less attractive. "For me, the risk is that we get a more positive U.S. employment report, on the basis of the early indications we've had in the last few days," said Adam Cole, global head of FX strategy at Royal Bank of Canada. The number of Americans filing new applications for unemployment benefits rose less than expected last week. Cole said a strong U.S. nonfarm payrolls figure on Friday would eclipse the Canadian data and could push the currency pair through C$1.33. Economists expect the U.S. economy to have added 223,000 jobs in July and for Canada to have added 5,000. Canadian government bond prices were mostly higher across the maturity curve, with the two-year up half a Canadian cent to yield 0.436 percent and the benchmark 10-year adding 24 Canadian cents to yield 1.449 percent. The three-year issue bucked the trend, and currently yields less than the two-year. The Canada-U.S. two-year bond spread was -26.9 basis points, while the 10-year spread was -77.2 basis points. (Editing by Meredith Mazzilli and James Dalgleish)
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