September 8, 2017 / 1:34 PM / 3 years ago

CANADA FX DEBT-C$ pulls back from 2-year high as investors weigh jobs data

    * Canadian dollar at C$1.2115, or 82.54 U.S. cents
    * Bond prices lower across the yield curve
    * 2-year yield touches a six-year high at 1.525 percent

    By Fergal Smith
    TORONTO, Sept 8 (Reuters) - The Canadian dollar was little
changed on Friday against its broadly weaker U.S. counterpart,
with the currency pulling back from an earlier 2-year high as
investors weighed domestic jobs data.
    Canada's economy added 22,200 jobs in August, mostly in
part-time employment, Statistics Canada said. The jobless rate
fell to 6.2 percent from 6.3 percent in July, matching the most
recent low of October 2008.             
     "The composition of the job gains was mixed and in my
opinion poor on balance," said Derek Holt, head of capital
markets economics at Scotiabank.
    Still, a pickup in wage growth could keep the door open to
further interest rate increases from the Bank of Canada after
the central bank hiked on Wednesday for the second time in three
    "I'd put the emphasis upon wages and I think we are on the
path to 2.5 to 3 percent wage growth off into next year," Holt
    Chances of a rate hike next month dipped to around 30
percent from 35 percent before the data, the overnight index
swaps market indicated.           
    At 9:08 a.m. ET (1308 GMT), the Canadian dollar          was
trading nearly unchanged at C$1.2115 to the greenback, or 82.54
U.S. cents.
    The currency's weakest level of the session was C$1.2134,
while it touched its strongest since May 2015 at C$1.2063.
    The U.S. dollar        lost ground against a basket of major
currencies, as a Reuters report that European Central Bank
officials were in broad agreement that their next step would be
to reduce their bond purchases boosted the euro.             
    Prices of oil, one of Canada's major exports, steadied after
almost a week of sharp gains as Hurricane Irma, one of the most
powerful storms in a century, drove towards Florida after
tearing through the Caribbean. Its predecessor, Harvey, had shut
a quarter of U.S. refineries and 8 percent of U.S. oil
    Canadian government bond prices were lower across the yield
curve, with the two-year            price down 5.5 Canadian
cents to yield 1.506 percent and the 10-year             falling
26 Canadian cents to yield 1.969 percent.
    The 2-year yield touched its highest intraday since July
2011 at 1.525 percent, while the gap between the 10-year yield
and its U.S. equivalent narrowed by 3.5 basis points to a spread
of -8.9 basis points, its narrowest since October 2013.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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