December 3, 2010 / 2:37 PM / 10 years ago

CANADA FX DEBT-C$ retreats from parity after weak job reports

 * Hits session low of 99.20 U.S. cents
 * Both U.S., Canadian reports below forecasts
 * Bank of Canada seen on hold well into 2011
 (Updates after U.S. jobs data)
 By Claire Sibonney
 TORONTO, Dec 3 (Reuters) - The Canadian dollar weakened to
a session low on Friday, pulling back from near parity with the
U.S. dollar, after starkly disappointing U.S. monthly jobs data
undermined the view of accelerating growth in coming months.
 U.S. nonfarm payrolls increased far less than expected in
November -- up 39,000 versus a consensus of 140,000 -- and the
jobless rate jumped to a seven-month high of 9.8 percent,
dampening hopes for a self-sustaining economic recovery.
 In the aftermath of the U.S. data, the Canadian dollar
CAD=D4 dropped as low as C$1.0081 against the greenback, or
99.20 U.S. cents. Overnight it was only two pips shy of parity
at C$1.0002, or 99.98 U.S. cents.
 "This number is perceived to undermine the growth story
that was unfolding so beautifully in the U.S." said Eric
Lascelles, chief Canadian macro strategist at TD Securities.
 Lascelles said "whisper numbers" for U.S. payrolls were
even higher than published forecasts, with the market talking
upside risks.
 "It's a bit of a shock to see the number come in this soft
and I think we're all going to need to revisit certain
assumptions and sort out whether this is a one-off or whether
earlier strength was a one-off."
 The Canadian currency was already retreating from near
one-for-one footing with its U.S. counterpart earlier after
domestic employment data showed a mixed performance in November
with fewer-than-expected jobs created. [ID:nN03271210]
 Both reports do little to change expectations the Bank of
Canada will hold its benchmark interest rate steady on Dec. 7
at 1 percent.
 "The Bank of Canada would care deeply about both figures
and at this point neither argues shriekingly for a hike in the
near term," added Lascelles.
 At 9:15 a.m. (1415 GMT), the Canadian dollar CAD=D4 stood
at C$1.0044 to the U.S. dollar, or 99.56 U.S. cents, slightly
lower than Thursday's North American session close at C$1.0039
to the U.S. dollar, or 99.61 U.S. cents.
 Canadian government bonds erased earlier losses, rallying
alongside Treasuries, as investors flocked to the relative
safety of government debt. [US/]
 The two-year government of Canada bond CA2YT=RR was up 13
Canadian cents to yield 1.612 percent, while the 10-year bond
CA10YT=RR gained 47 Canadian cents to yield 3.144 percent.
 (Additional reporting by Ka Yan Ng; Editing by Jeffrey

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