April 5, 2019 / 7:10 PM / 8 months ago

CANADA FX DEBT-C$ hits one-week low as jobs fall backs more dovish BoC

 (Adds strategist quote and details; updates prices)
    * Canadian dollar dips 0.3% against the greenback
    * Canada sheds 7,200 jobs in March
    * Loonie touches its weakest since March 29 at 1.3403
    * Price of U.S. oil rises 1.6%
    * Canadian bond prices edge lower across much of the yield
curve

    By Fergal Smith
    TORONTO, April 5 (Reuters) - The Canadian dollar weakened to
a one-week low against its U.S. counterpart on Friday as
domestic data showing an unexpected decline in jobs diminished
prospects of the Bank of Canada turning more upbeat on the
economy.
    A six-month string of job gains, including blockbuster
increases in January and February, had helped bolster investor
sentiment for the loonie, offsetting weak gross domestic product
data and a slowdown in the global economy that could hurt
Canada's exports.
    But that sequence ended in March, as Canada shed 7,200 jobs.
Analysts in a Reuters poll had forecast a marginal gain of
1,000.             
    "The assumption that strong employment growth would return
the Bank of Canada to a hawkish path was disappointed and
traders went short on the Canadian dollar," said Karl Schamotta,
director global markets strategy at Cambridge Global Payments.
    Perceived chances of an interest rate cut this year from the
central bank nudged up to 40% from 38% before the data, the
overnight index swaps market indicated.           
    At 2:36 p.m. (1836 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3392 to the greenback, or 74.67 U.S.
cents. The currency, which was also down 0.3% for the week,
touched its weakest since March 29 at 1.3403.
    The loonie has advanced 1.9% since the start of the year
even as it has lost ground since February, making it the second
best performing currency in the G10 after sterling.
    Still, strategists see little upside for the Canadian dollar
over the coming months, cutting their bullish forecasts for the
currency as worries about the global economy boost demand for
higher-yielding U.S. dollars, a Reuters poll showed.
            
    The U.S. dollar        rose on Friday against a basket of
major currencies, helped by data showing better-than-expected
U.S. job growth.
    The U.S. data was also supportive of the price of oil, one
of Canada's major exports, as it tempered fears that global
crude demand might weaken. U.S. crude oil futures        settled
1.6% higher at $63.08 a barrel.             
    Canadian government bond prices edged lower across much of
the yield curve, with the two-year            price down 2
Canadian cents to yield 1.598% and the 10-year            
falling 3 Canadian cents to yield 1.704%. 

 (Reporting by Fergal Smith in Toronto
Editing by James Dalgleish)
  
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