September 7, 2018 / 7:38 PM / 16 days ago

CANADA FX DEBT-C$ extends week's decline, weighed by surprise job losses

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.3170, or 75.93 U.S. cents
    * Loonie on track to fall 0.9 percent for the week
    * Canada loses 51,600 jobs in August
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Sept 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday and was on track to fall
nearly 1 percent for the week after data showed the economy
unexpectedly shed jobs in August.
    Canada's economy lost 51,600 jobs in August, the biggest
decline since January, as losses in part-time work overtook
gains in full-time employment, data from Statistics Canada
showed. Analysts surveyed by Reuters had expected the economy to
add 5,000 jobs.             
    "I think there was some disappointment on the headline
release," said Karl Schamotta, director of global markets
strategy at Cambridge Global Payments. "The replacement of
part-time positions with full-time to some extent helped to
nullify the overall impact." 
    Perceived chances of a Bank of Canada interest rate hike in
October dipped to 57 percent from 60 percent before the data,
the overnight index swaps market indicated.           
    On Thursday, Bank of Canada Senior Deputy Governor Carolyn
Wilkins boosted rate hike expectations when she said in a speech
that the central bank had discussed dropping its gradual
approach to hiking rates.             
    In separate data, the Ivey Purchasing Managers Index (PMI)
edged up to 61.9 from 61.8 in July, indicating an acceleration
in economic activity.             
    At 3:02 p.m. (1902 GMT), the Canadian dollar          was
trading 0.2 percent lower at C$1.3170 to the greenback, or 75.93
U.S. cents.
    The currency traded in a range of C$1.3111 to C$1.3190. For
the week, the loonie was on track to decline 0.9 percent.
    Losses for the Canadian dollar on Friday came as stocks fell
after U.S. President Donald Trump said fresh tariffs are ready
to go on $267 billion worth of Chinese imports.              
    Canada runs a current account deficit and exports many
commodities, so its economy could be hurt if an escalation in
the trade dispute between the United States and China reduced
the global flow of trade or capital.
    The price of oil       , one of Canada's major exports,
settled nearly unchanged.             
    The U.S. dollar        rose against a basket of currencies
after strong U.S. jobs data cemented expectations for the
Federal Reserve to increase interest rates further.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
fell 47 Canadian cents to yield 2.287 percent.             
    A deal to revamp the North American Free Trade Agreement
remained elusive but differences between Canada and the United
States appeared to have narrowed.              

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
James Dalgleish)
  
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