April 7, 2017 / 2:35 PM / 3 years ago

CANADA FX DEBT-C$ rallies, boosted by domestic jobs strength

    * Canadian dollar at C$1.3360, or 74.85 U.S. cents
    * Loonie touches its strongest since Monday at C$1.3343
    * Bond prices higher across a flatter yield curve
    * 10-year yield hits four-month low at 1.505 percent

    By Fergal Smith
    TORONTO, April 7 (Reuters) - The Canadian dollar
strengthened on Friday to a four-day high against its U.S.
counterpart, boosted by stronger-than-anticipated domestic
employment data, while U.S. job gains undershot expectations.   
    Canada added 19,400 jobs in March, most of them full-time,
Statistics Canada data showed. Analysts in a Reuters poll had
forecast 5,000 new positions.             
    "It is still indicating that firms are confident to take on
workers," said Paul Ferley, assistant chief economist at Royal
Bank of Canada.
    March marked the fourth month in a row that Canada has added
jobs, the latest sign the economy is recovering from a prolonged
slump caused by low oil prices.
    Still, economists doubt that the Bank of Canada will drop
its cautious tone next week when it releases its interest rate
announcement and Monetary Policy Report.
    "Policy is likely to remain unchanged, probably supported by
ongoing concern about those external risks," Ferley said.
    The implied probability of an interest rate hike this year
increased from less than 20 percent before the data, but
remained at less than a one-in-four chance, data from overnight
index swaps showed.           
    U.S. job growth slowed sharply in March amid continued
layoffs in the retail sector. But a drop in the unemployment
rate to a near 10-year low of 4.5 percent suggested the labor
market was still tightening.             
    At 9:50 a.m. ET (1350 GMT), the Canadian dollar          was
trading at C$1.3360 to the greenback, or 74.85 U.S. cents,
stronger than Thursday's close of C$1.3418, or 74.53 U.S. cents.
    The currency's weakest level of the session was C$1.3431,
while it touched its strongest since Monday at C$1.3343.
    Gains for the loonie came as prices of oil, one of Canada's
major exports, rose after the United States fired missiles at a
Syrian government air base, sending shockwaves through global
markets and raising concerns that the conflict could spread in
the oil-rich region.      
    U.S. crude        prices were up 0.46 percent at $51.94 a
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries and other safe-haven
assets. The two-year            rose 0.5 of a Canadian cent to
yield 0.723 percent and the 10-year             gained 19
Canadian cents to yield 1.527 percent.
    The 10-year yield touched its lowest intraday since Nov. 17
at 1.505 percent.

 (Editing by Bernadette Baum)
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