CANADA FX DEBT-C$ weakens as U.S. data eclipses domestic jobs strength
* Canadian dollar at C$1.0656 or 93.84 U.S. cents * Fed taper concerns overcome strong Canadian jobs numbers * Bond prices mostly lower across maturity curve By Leah Schnurr TORONTO, Dec 6 (Reuters) - The Canadian dollar weakened against the greenback on Friday as a strong domestic employment report was offset by better-than-expected jobs figures in the United States, which bolstered expectations the Federal Reserve could reduce its stimulus sooner rather than later. The currency has been hammered in recent weeks by a host of factors, including a more dovish Bank of Canada, weak oil prices and uncertainty about the path of monetary stimulus south of the border. Trading was choppy early in the session on Friday with the loonie retreating to its 3-1/2-year low shortly after the jobs reports were released, matching a trough hit on Wednesday. Data showed Canada added 21,600 jobs last month, far greater than the 12,000 that economists had expected, while the unemployment rate held at 6.9 percent. The Canadian dollar firmed to a session high after the report, but quickly whipsawed lower after a separate report showed the U.S. economy created 203,000 jobs in November, also better than forecast. The strength of the jobs market is seen as key to determining when the Fed will start to withdraw. U.S. policymakers next meet on Dec. 17-18. "The Canadian data is certainly proving itself to be reasonably robust, it's more just that the central banks are the missing piece to further Canada's strength," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. The Canadian dollar ended the North American session at C$1.0656 to the greenback, or 93.84 U.S. cents, weaker than Thursday's close of C$1.0641, or 93.98 U.S. cents. The loonie traded as low as C$1.0708. The Canadian dollar lost 0.4 percent on the week, its third negative week in a row. A faster timeline for the Fed reducing its $85 billion a month in bond purchases is seen as bearish for the Canadian dollar as the move is expected to reduce risk appetite and benefit the U.S. currency. The Canadian dollar has been down in five out of the last six sessions as the currency has fallen through key technical levels. A statement from the Bank of Canada earlier in the week showed the central bank is increasingly concerned about possible disinflation, reinforcing that market's view interest rates will stay low for some time. "When you've got a central bank talking down its growth and rate story, then it's going to be effective at weakening the currency," said Mikolich. Government bond prices were mostly lower across the maturity curve. The two-year bond was off 1-1/2 Canadian cents to yield 1.094 percent, while the benchmark 10-year bond fell 9 Canadian cents to yield 2.688 percent.
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