November 3, 2017 / 1:43 PM / a month ago

CANADA FX DEBT-C$ hits 9-day high as jobs data boosts case for rate hikes

    * Canadian dollar at C$1.2735, or 78.52 U.S. cents
    * Loonie touches its strongest since Oct. 25 at C$1.2716
    * Canadian jobs rise 35,300 in October
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Nov 3 (Reuters) - The Canadian dollar strengthened
to a nine-day high against its U.S. counterpart on Friday after
stronger-than-expected domestic jobs data supported the case for
further interest rate increases from the Bank of Canada next
year.
    Canada's economy added 35,300 jobs in October on gains in
full-time employment, while wages posted their biggest gain in
18 months. Analysts had expected the economy to add 15,000 job.
            
    "The jobs data looks pretty good, with full-time employment
way up again," said Andrew Kelvin, senior rates strategist at TD
Securities.
    "What we have seen in the labor data does support tighter
(monetary) policy at some point next year and perhaps sooner
than later."
    Perceived chances of another rate hike by March rose to 88
percent from 77 percent before the data, the overnight index
swaps market indicated.           
    The central bank hiked rates in July and September for the
first time in seven years, but has turned more dovish since
September.
    At 9:23 a.m. ET (1323 GMT), the Canadian dollar          was
trading at C$1.2735 to the greenback, or 78.52 U.S. cents, up
0.6 percent.
    The currency's weakest level of the session was C$1.2835,
while it touched its strongest since Oct. 25 at C$1.2716.
    Adding to support for the loonie, oil prices neared their
highest levels in more than two years, with buyers attracted by
expectations of an extension to a global pact to cut output that
has reduced oversupply.             
    Oil is one of Canada's major exports.
    In separate data, Canada's trade deficit in September was
essentially unchanged at C$3.18 billion as both imports and
exports dropped for the fourth consecutive month.             
    The U.S. dollar        edged lower against a basket of major
currencies. U.S. job growth accelerated in October after
hurricane-related disruptions hurt employment in September, but
there were signs that labor market momentum was slowing as
annual wage gains sharply retreated.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 5.5 Canadian cents to
yield 1.44 percent and the 10-year             falling 8
Canadian cents to yield 1.968 percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent narrowed by 2.4 bps to a spread of -17.7 basis
points.

 (Reporting by Fergal Smith; editing by Susan Thomas)
  
 

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