August 6, 2010 / 12:10 PM / 10 years ago

CANADA FX DEBT-C$ slips, bonds rise after weak Canada jobs data

 * C$ slips to session low, recovers to 97.86 U.S. cents
 * Bond prices edge up
 * Canada economy loses 9,300 jobs, first jobs loss of 2010
 * Next up: U.S. nonfarm payrolls at 8:30 a.m./1230 GMT
 TORONTO, Aug 6 (Reuters) - The Canadian dollar slipped to a
session low against the U.S. currency on Friday, while
government bonds climbed, after a Canadian employment report
showed the economy posted its first job losses of the year.
 Statistics Canada said the economy lost 9,300 jobs in July,
while the unemployment rate unexpectedly rose to 8 percent from
7.9 percent. Analysts in a Reuters poll had predicted an
increase of 15,000 jobs after a strong gain of 93,200 in June.
 The data knocked the Canadian unit CAD=D4 as low as
C$1.0246 to the U.S. dollar, or 97.60 U.S. cents, from C$1.0200
to the U.S. dollar, or 98.04 U.S. cents, just before the
 "It is responding to the employment report, which was
weaker than the market expected," said Doug Porter, deputy
chief economist at BMO Capital Markets. "More broadly speaking,
we've seen a little bit of caution in broader financial markets
ahead of the U.S. employment report."
 The overall trading tone for markets rests on the U.S. jobs
report, which will go a long way in determining the pace of the
economic recovery of Canada's biggest trading partner.
 U.S. nonfarm payrolls, due at 8:30 a.m., are seen rising a
modest 90,000, and the unemployment rate is expected to climb
to 9.6 percent, from 9.5 percent in June. [ECI/US]
 By 7:45 a.m. (1140 GMT), the currency had trimmed losses to
C$1.0222 to the U.S. dollar, or 97.83 U.S. cents, compared with
Thursday's finish at C$1.0166 to the U.S. dollar, or 98.37 U.S.
 Canadian bond prices were firmer across the curve after the
domestic jobs data, which added to recent evidence that
country's recovery from the recession is starting to cool and
could keep the Bank of Canada on a path of gradual rate
 Analysts said the Canadian figures should also keep the
Bank of Canada on track for a quarter-point rate rise on Sept.
8. But market pricing, as measured by yields on overnight index
swaps, fell to roughly a 62 percent chance compared with about
68 percent before the report. BOCWATCH
 The two-year bond CA2YT=RR  was up 7 Canadian cents to
yield 1.482 percent, while the 10-year bond CA10YT=RR gained
32 Canadian cents to yield 3.087 percent.
 (Reporting by Ka Yan Ng and John McCrank; Editing by Theodore

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