CANADA FX DEBT-C$ weakens to 1-week low as risk appetite wanes, oil falls
(Adds analyst quote, updates prices) * Canadian dollar ends at C$1.3037, or 76.70 U.S. cents * Loonie touches its weakest since Sept. 2 at C$1.3053 * Canadian bond prices lower across steeper maturity curve * 10-year yield touches its highest in six weeks at 1.164 percent By Fergal Smith TORONTO, Sept 9 (Reuters) - The Canadian dollar weakened to a one-week low against its U.S. counterpart on Friday as increased risk aversion and lower oil prices offset stronger-than-expected domestic jobs data. Canada's economy added 26,200 jobs in August, recovering some of the positions lost in recent months. "I don't know that it should change anyone's broader opinion on the Canadian economy, but it's still encouraging," said Andrew Kelvin, senior rates strategist at TD Securities. The implied probability of a Bank of Canada interest rate cut this year was little changed after the data at around 10 percent, overnight index swaps data showed. U.S. stocks dropped as investors were rattled by a nuclear test by North Korea and comments by Federal Reserve officials that hinted at a U.S. interest rate hike. "The Canadian dollar is doing what most of the other currencies are doing, which is losing ground against the U.S. dollar," said Daniel Katzive, head of FX strategy North America at BNP Paribas. Risk-sensitive commodity exporter currencies such as the Canadian dollar have weakened more than some of the core currencies as expectations rose that the Fed will raise interest rates and yield curves steepened, Katzive added. Steepening in the yield curves of core economies, such as the U.S. and Germany, came after the European Central Bank on Thursday kept its policy stance unchanged, while the Bank of Japan is studying several options to steepen its yield curve. U.S. crude settled $1.74 lower at $45.88 a barrel. The Canadian dollar ended at C$1.3037 to the greenback, or 76.70 U.S. cents, weaker than Thursday's close of C$1.2928, or 77.35 U.S. cents. The currency's strongest level of the session was C$1.2912, while it touched its weakest since Sept. 2 at C$1.3053. Losses for the loonie came after a more dovish-than-expected statement from the Bank of Canada on Wednesday. Speculators pared bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed. Net long Canadian dollar positions dipped to 20,905 contracts in the week ended Sept. 6 from 22,400 contracts in the prior week. Canadian government bond prices were lower across a steeper yield curve, with the two-year bond down 2.5 Canadian cents to yield 0.583 percent and the benchmark 10-year falling 64 Canadian cents to yield 1.153 percent. The 10-year yield touched its highest since July 27 at 1.164 percent. (Reporting by Fergal Smith; Editing by Lisa Von Ahn and Chris Reese)
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