CANADA FX DEBT-C$ ekes out small gain as investors eye jobs data

Thu Sep 5, 2013 10:09am EDT
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* C$ at C$1.0484 vs $US, or 95.38 U.S. cents
    * Economists expect 20,000 jobs created in Canada in Aug.
    * Bond prices mostly lower across maturity curve

    By Solarina Ho
    TORONTO, Sept 5 (Reuters) - The Canadian dollar was mildly
firmer against its U.S. counterpart on Thursday, even as the
U.S. dollar held near a six-week high against other key
    Investors, taking a wait-and-see stance, focused on North
American jobs data due on Friday.
    Should U.S. nonfarm payrolls show a sustained recovery in
the job market, it will likely be viewed as enough for the
Federal Reserve to begin trimming its bond-buying program when
it meets in mid-September.
    In Canada, economists are expecting 20,000 new jobs were
created in August, following a sharp drop of 39,400 in July.
    "We see some substantial moves in other currencies compared
to the big dollar ... And yet Canada has been pretty much
anchored to current levels. I think that's a reflection of North
American payrolls tomorrow and folks choosing to err on the side
of caution," said Brad Schruder, director of foreign exchange at
BMO Capital Markets.
    Schruder noted the recent string of disappointing Canadian
data, but said there were factors that could result in a
positive surprise for Canadian employment data.
    "Folks don't really want to stick their necks out either
way. I wouldn't be surprised if later on today you saw USD/CAD
try to push lower, i.e. see the Canadian dollar appreciate as
the market tries to shake out some weaker positions," he said.
    The Canadian dollar was trading at C$1.0484 versus
the U.S. dollar, or 95.38 U.S. cents around 9:35 a.m. EDT (1335
GMT). This was marginally stronger than Wednesday's finish at
C$1.0492, or 95.31 U.S. cents.
    The Canadian dollar, which was outperforming all of its
major counterparts except for the Brazilian currency,
could strengthen by as much as 1 cent over the next two
sessions, despite the U.S. dollar strength, Schruder said.
    Prices for Canadian government debt were mostly lower, with
the two-year bond off 3.5 Canadian cents to yield
1.256 percent and the benchmark 10-year bond off 31
Canadian cents to yield 2.757 percent.