March 7, 2017 / 10:04 PM / 3 years ago

CANADA FX DEBT-C$ steadies as exports rise; jobs data and Fed eyed

 (Updates prices to close)
    * Canadian dollar settles at C$1.3416, or 74.55 U.S. cents
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, March 7 (Reuters) - The Canadian dollar held its
ground against a broadly firmer greenback on Tuesday, as
domestic data showed a third consecutive monthly trade surplus
in January and investors awaited jobs data that could provide
further direction.
    The Canadian dollar          settled at C$1.3416 to the
greenback, or 74.55 U.S. cents, barely weaker than Monday's
close of C$1.3410, or 74.57 U.S. cents.
    The currency's strongest level of the session was C$1.3383,
while its weakest was C$1.3436, just one pip under the nearly
two-month low the loonie touched on Friday.
    "From here, there's a lot on the calendar that can still
move dollar/Canada to where we see it going, which is the C$1.40
level by Q2," said Eric Theoret, a currency strategist at
    "This week it's the employment picture and then next week
the highlight will be the Fed, obviously."
    Investors will be looking for strong U.S. employment growth 
in a private payroll provider's data on Wednesday and from
nonfarm payrolls on Friday to cement the view that the Fed will
hike interest rates when it meets next week and pick up the pace
of future hikes.
    Canadian jobs data is also due on Friday, although the Bank
of Canada is broadly seen holding steady on monetary policy
despite recent solid economic data.
    The C$807 million trade surplus reported on Tuesday slightly
exceeded analysts' forecasts of a C$700 million positive
balance. Exports rose by 0.5 percent while volumes expanded by
1.0 percent.             
    "I think it provides some modest encouragement but I think
it still leaves the Bank (of Canada) in data watch mode,
remaining on the sidelines," said Paul Ferley, assistant chief
economist at Royal Bank of Canada.
    "Their big concern is the prospect of protectionism emerging
from the U.S.," he said. "Certainly, if anything on that front
were to emerge, these tentative signs of improvement could get
swamped by signs of policy initiative emerging from the U.S."
    Canada sends about 75 percent of its exports to the United
States and could suffer badly if U.S. President Donald Trump
follows through on promises to renegotiate the North American
Free Trade Agreement (NAFTA) or if a proposed border adjustment
tax is implemented.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
dipped 6 Canadian cents to yield 0.800 percent, and the 10-year
            declined 24 Canadian cents to yield 1.738 percent.

 (Additional reporting by Fergal Smith; Editing by W Simon and
Jonathan Oatis)
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