May 8, 2020 / 7:46 PM / 3 months ago

CANADA FX DEBT-Canadian dollar pads weekly gain as investors look past jobs plunge

 (Adds strategist quotes and details; updates prices)
    * Canadian dollar rises 0.2% against the greenback
    * Canada's economy sheds 2 million jobs in April
    * Loonie touches a one-week high at 1.3907
    * Canadian bond yields trade mixed across a steeper curve

    By Fergal Smith
    TORONTO, May 8 (Reuters) - The Canadian dollar added to the
week's rally against its U.S. counterpart on Friday as signs of
easing U.S.-China frictions bolstered investor sentiment and
domestic data showed a plunge in jobs that was about half the
number expected.
    The Canadian dollar          was trading 0.2% higher on the
day at 1.3938 to the greenback, or 71.75 U.S. cents. The
currency touched its strongest intraday level since April 30, at
1.3907, and was up 0.8% for the week.
    "I think this is mostly a risk-on story," said Kurt Reiman,
chief Canadian investment strategist at BlackRock. "It has been
another decent week for equity markets globally, oil prices have
been turning higher."
    "The mood is partly a function of the news about phased
reopenings of the economy, but also a bit more positive mood
music on the U.S.-China trade front," Reiman said.
    Top U.S. and Chinese trade representatives discussed their
Phase 1 trade deal, with China saying they agreed to improve the
atmosphere for its implementation and the United States saying
both sides expected obligations to be met.             
    Canada runs a current account deficit and is a major
producer of commodities, including oil, so the country's
currency tends to be sensitive to the global flow of trade and
    Global share markets          climbed to weekly highs, while
U.S. crude oil futures        were up 3.8% at $24.44 a barrel,
notching a second straight week of gains.
    Canada lost a record-breaking 2 million jobs in April, when
non-essential business was halted across the country to help
contain the coronavirus pandemic. That was half the 4 million
jobs decline that economists had expected, but the data did not
capture 1.1 million people who have temporarily lost their jobs
and expected to return to work once restrictions were relaxed.
    "Not as bad a feared, but still a terrible report as the
contraction in the job market accelerated in April amid a full
month of lockdowns," said Ryan Brecht, a senior economist at
Action Economics.
    Ottawa, which is rolling out about C$300 billion in economic
support measures, said it would extend a wage subsidy program
beyond June.
    The U.S. economy, where Canada sends about 75% of its
exports, also lost fewer jobs in April than feared.            
    Canadian government bond yields were mixed across a steeper
curve, with the 10-year yield             up 3.4 basis points at

 (Reporting by Fergal Smith; Editing by David Gregorio and
Leslie Adler)
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