March 10, 2017 / 3:15 PM / 8 months ago

CANADA FX DEBT-C$ strengthens as jobs rise offsets trade risks

    * Canadian dollar at C$1.3464, or 74.27 U.S. cents
    * Bond prices dip slightly across much of the yield curve
    * 10-year yield touches a six-week high at 1.838 percent.

    By Fergal Smith
    TORONTO, March 10 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday as
stronger-than-expected domestic jobs data offset risks to the
economy from an uncertain trade outlook.
    The 15,300 increase in Canadian jobs last month topped
economists' expectations for a gain of 2,500, data from
Statistics Canada showed. It extended the labor market's recent
strong run as full-time hiring jumped.             
    "The good times keep on rolling for the Canadian labor
market and the quality of employment also looks a little bit
firmer this month," said Nick Exarhos, economist at CIBC Capital
Markets.
    The chances of a Bank of Canada interest rate hike this year
nudged up to nearly 50 percent, data from the overnight index
swaps market showed. It was less than 30 percent after the Bank
of Canada left rates on hold at the start of the month and
focused on the "significant uncertainties" facing the economy.
          
    "There are still larger risks out there to the Canadian
economy in terms of trade," Exarhos said, who does not expect
the central bank to turn hawkish just yet despite recent
strength in the domestic economy.
    Implementation of a proposed U.S. border adjustment tax
would reduce the competitiveness of Canada's exports as well as
pressure the prices of its key commodities, such as oil, through
a stronger U.S. dollar, analysts say.             
    Increased chances of a Bank of Canada rate hike came as data
showed U.S. employers hired workers at a robust pace in
February, which could give the Federal Reserve the green light
to raise interest rates next week despite slowing economic
growth.             
    At 9:51 a.m. ET (1451 GMT), the Canadian dollar          was
trading at C$1.3464 to the greenback, or 74.27 U.S. cents,
stronger than Thursday's close of C$1.3508, or 74.03 U.S. cents.
    The currency's strongest level of the session was C$1.3421,
while its weakest was C$1.3514.
    U.S. crude        prices were unchanged at $49.28 a barrel,
steadying after they dropped to their lowest in more than three
months on oversupply concerns.             
    Oil is one of Canada's major exports.
    Canadian government bond prices were slightly lower across
much of a flatter yield curve, with the two-year            down
2 Canadian cents to yield 0.843 percent and the 10-year
            falling 1 Canadian cent to yield 1.815 percent.
    The 10-year yield touched its highest intraday since Jan. 26
at 1.838 percent.    

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
 

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