CANADA FX DEBT-C$ slips as Fed timing mulled, jobs data in view

Thu Oct 9, 2014 4:24pm EDT
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* Canadian dollar at C$1.1173 or 89.50 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Oct 9 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday, unraveling the previous day's
strong advance as comments from a Federal Reserve official
tempered concerns about what impact the recent rise in the U.S.
dollar might have on monetary policy. 
    The loonie was also pressured by weaker oil prices, and the
market was cautious ahead of the Canadian unemployment report
for September, the main economic event of the week. 
    Wednesday's release of the latest Fed minutes roiled
currency markets as they showed concern from a "couple" of
policymakers that the rally in the U.S. dollar might slow a
gradual increase in inflation toward the Fed's 2 percent goal.
    The U.S. dollar has been on a tear since July and is one of
the major reasons behind the Canadian dollar's weakness in
recent months.
    The minutes prompted some investors to push their
expectation for when the Fed will raise rates further out into
next year.
    But on Thursday, the Fed's No. 2 policymaker, Stanley
Fischer, signaled he was comfortable with the strength of the
    "His comments definitely appear to dial that back and
contain some of those interest rates moves," said Ken Wills,
currency strategist and broker at CanadianForex in Toronto.
    Still, this kind of volatility could continue with markets
watching the data and trying to gauge when the Fed will start to
hike rates, Wills said. "The market is going to be on edge for
the next six months trying to guess when that is."
    The Canadian dollar ended the North American
session at C$1.1173 to the greenback, or 89.50 U.S. cents,
weaker than Wednesday's close of C$1.1104, or 90.06 U.S. cents. 
    The loonie has churned higher in recent sessions after
coming within striking distance of touching the low for the year
last Friday. For the week, the Canadian dollar is up 0.7
    "Our thinking is that we are probably at the weaker end of
the range right now around C$1.12," said Hosen Marjaee, senior
managing director of Canadian fixed income at Manulife Asset
Management in Toronto.
    Still, it could weaken to C$1.15 if recent trends, such as
U.S. dollar strength, commodities weakness and geopolitical
tensions, continue, he said.
    Friday's jobs report is forecast to show Canadian employers
added 20,000 jobs last month, rebounding from a loss of 11,000
in August. But the volatile nature of the report, which has seen
big swings both up and down, could keep investors wary of taking
aggressive bets.
    There is a wide range that the loonie could trade in from
C$1.1279 to C$1.1080 depending on what the data shows, Wills
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 2.8 Canadian
cents to yield 1.067 percent and the benchmark 10-year
 down 18 Canadian cents to yield 2.035 percent.

 (Editing by Leslie Adler)