May 10, 2019 / 1:35 PM / 4 months ago

CANADA FX DEBT-C$ rallies the most since March as jobs surge clips rate cut bets

    * Canadian dollar rises 0.6% against the greenback
    * Loonie touches its strongest since May 1 at 1.3384
    * Canada adds 106,500 jobs in April
    * Chances of a BoC rate cut this year fall to less than 30%

    TORONTO, May 10 (Reuters) - The Canadian dollar strengthened
to a nine-day high against its U.S. counterpart on Friday, as
investors slashed bets for an interest rate cut this year from
the Bank of Canada after domestic data showing a record jobs
gain.
    The Canadian economy added 106,500 jobs in April, the
biggest monthly gain on record, led by employment increases in
the two most populous provinces, Ontario and Quebec, Statistics
Canada data showed. That far outstripped analysts' expectations
of 10,000 jobs.
    Chances of an interest rate cut by December fell to less
than 30% from about 40% before the jobs report, the overnight
index swaps market indicated.           
    At 9:16 a.m. (1316 GMT), the Canadian dollar          was
trading 0.6% higher at 1.3392 to the greenback, or 74.67 U.S.
cents, its biggest gain since March 29. The currency touched its
strongest intraday level since May 1 at 1.3384.
    The loonie rallied even as U.S. President Donald Trump said
he was in "absolutely no rush" to finalize a trade agreement
with China, after the United States increased duties to 25% on
$200 billion worth of Chinese goods overnight.             
    Canada runs a current account deficit and exports many
commodities, including oil, so its economy could be hurt by a
slowdown in the global flow of capital or trade.
    U.S. crude oil futures        were down 0.1% at $61.62 a
barrel.             
    Separate domestic data showed the value of Canadian building
permits rose 2.1% in March, driven higher by construction plans
in the four Western provinces, after falling a revised 5.1% in
February.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 7.5 Canadian cents to
yield 1.623% and the 10-year             falling 44 Canadian
cents to yield 1.727%.
    The gap between Canada's 2-year yield and its U.S.
equivalent narrowed 5.5 basis points to a spread of 62.9 basis
points in favor of the U.S. bond, its narrowest since Jan. 16.  
 

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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