CANADA FX DEBT-C$ ends weaker as grim jobs data weighs

Fri Apr 5, 2013 4:38pm EDT
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* C$ at C$1.0164, or 98.39 U.S. cents

* Canadian, U.S. jobs data far weaker than expected

* Markets may start to speculate on Bank of Canada easing

By Andrea Hopkins

TORONTO, April 5 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday after grim employment data in Canada and the United States sparked concerns the economic recovery may be flagging, sending investors to the safety of government bonds.

Major stock markets tumbled, the U.S. dollar fell and U.S. Treasury securities prices rallied after the weaker-than-expected U.S. jobs report, while Brent crude oil fell to an eight-month low. Safe-haven gold prices rose.

A risk-off tone typically hurts the Canadian dollar, and the downdraft was worsened because the Canadian data was weaker even than the unexpectedly tepid U.S. employment data.

"On a relative basis our trade and employment numbers were softer than the U.S. That's the fundamental reason (the Canadian dollar weakened further than the greenback)," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital.

"The broader risk-off tone would have suggested a weaker Canadian dollar as well, and with all those things combined it has actually held in surprisingly strong. I think in part it may have been from some demand for Canadian assets overseas, and that helped prevented a more significant weakening."   Continued...