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CANADA FX DEBT-Canadian dollar slides as jobs decline revives rate cut bets

    * Canadian dollar weakens 0.6% against the greenback
    * Canada's economy sheds 71,200 jobs in November
    * Chances of an interest rate cut by July rise to 50%
    * Canada-U.S. 2-year spread narrows by 7.7 basis points 

    TORONTO, Dec 6 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, paring some of this
week's gains after data showing a surprise slump in domestic
jobs raised expectations for a Bank of Canada interest rate cut
over the coming months.
    The Canadian job market lost 71,200 net positions in
November while the unemployment rate rose to 5.9%, the highest
seen in more than a year, data from Statistics Canada showed.
Analysts had forecast a gain of 10,000 jobs.             
    "It's clearly a very disappointing report," said Robert
Both, Canadian macro strategist at TD Securities. "This is a
pushback maybe against the optimism we've seen over the last few
weeks."
    Chances of a Bank of Canada interest rate cut by July rose
to 50% from about 40% before the jobs data, the overnight index
swaps market indicated.           
    Easing expectations had been cooled earlier this week by the
Bank of Canada. On Wednesday, Canada's central bank held its
overnight interest rate at 1.75% as expected and cited early
signs the global economy was stabilizing.             
    At 9:15 a.m. (1415 GMT), the Canadian dollar          was
trading 0.6% lower at 1.3254 to the greenback, or 75.45 U.S.
cents. The currency, which notched on Thursday a four-week high
at 1.3158, traded in a range of 1.3173 to 1.3258.
    For the week, the loonie was on track to rise 0.2%.  
    The U.S. dollar        rose against a basket of major
currencies after data showed the U.S. economy created many more
jobs than expected in November, supporting the Federal Reserve's
stance of pausing interest rate cuts at its last meeting.
            
    The price of oil, one of Canada's major exports, dipped but
was on track for weekly gains as a meeting of OPEC and its
allies agreed to more output cuts in early 2020. U.S. crude oil
futures        were down 0.4% at $58.21 a barrel.             
    Canadian government bond prices were higher across much of
the yield curve, with the two-year            price rising 3.5
Canadian cents to yield 1.662% and the 10-year             up 10
Canadian cents to yield 1.603%.
    The gap between Canada's 2-year yield and its U.S.
counterpart narrowed by 7.7 basis points to a spread of 2.1
basis points in favor of the Canadian bond. 

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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