CANADA FX DEBT-C$ pressured by jobs loss, lower oil prices
* Canadian dollar at C$1.3790 or 72.52 U.S. cents * Bond prices lower across the maturity curve By Fergal Smith TORONTO, Feb 5 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday after Canadian jobs data underlined the economy's struggles to cope with an oil shock, while oil prices reversed lower after a tepid U.S. jobs gain. Canada's January jobs loss somewhat overshadowed encouraging improvement in its trade deficit, including strength in exports. But it is unlikely to trigger a near-term rate cut from the Bank of Canada, according to Bipan Rai, executive director, macro strategy at CIBC Capital Markets. "They are still very much waiting for the release of the budget and any sort of fiscal stimulus," he said. Meanwhile, traders bet that the U.S. Federal Reserve is more likely to raise interest rates this year after the U.S. employment report showed a long-awaited surge in wages and an unemployment rate at an eight-year low. U.S. crude prices were down 1.07 percent to $31.38 a barrel, while Brent crude lost 0.78 percent to $34.19. At 9:33 a.m. EST (1433 GMT), the Canadian dollar was trading at C$1.3790 to the greenback, or 72.52 U.S. cents, weaker than Thursday's official close of C$1.3745, or 72.75 U.S. cents. The currency's strongest level of the session was C$1.3710, while its weakest level was C$1.3816. On Thursday, the currency touched its strongest since Dec. 11 at C$1.3640. Canada lost 5,700 jobs in January and the unemployment rate edged up to a two-year high of 7.2 percent. Analysts polled by Reuters had forecast a gain of 5,500 positions and for the unemployment rate to stay at 7.1 percent. The trade deficit narrowed to a smaller-than-expected C$585 million in December from a revised C$1.59 billion in November as exports grew at a faster pace than imports. Canadian government bond prices were lower across the maturity curve, with the two-year price down 5 Canadian cents to yield 0.412 percent and the benchmark 10-year falling 36 Canadian cents to yield 1.187 percent. The Canada-U.S. 10-year bond spread was 2.3 basis points less negative at -69.3 basis points as Canadian government bonds underperformed in the belly and at the long-end of the curve. (Reporting by Fergal Smith; Editing by Nick Zieminski)
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