January 7, 2011 / 1:08 PM / 10 years ago

CANADA FX-C$ jumps as Canada jobs beats forecasts

 * C$ holds close to session high at $1.0073
 * Bonds weighed by firm Canada jobs, forecasts on US data
 * Canada adds more jobs than expected in December
 TORONTO, Jan 7 (Reuters) - The Canadian dollar firmed to a
session high against the greenback on Friday after domestic
December employment data beat expectations.
 The currency CAD=D4 reached C$0.9925 to the U.S. dollar,
or $1.0076, rising from Thursday's North American session close
at C$0.9969 to the U.S. dollar, or $1.0031.
 By 7:45 a.m. (1245 GMT), the currency held close to the
high at C$0.9928 to the U.S. dollar, or $1.0073.
 The currency was already moving higher ahead of the
figures, which showed Canada's economy added 22,000 jobs in
December, compared with 15,200 in November, on the strength of
manufacturing and full-time employment.
 Statistics Canada also said the unemployment rate held
steady at 7.6 percent for a second month. For details, see
 "The market does seem to at least tentatively like it.
We've seen the Canadian dollar do reasonably well as a
consequence, and we've seen the bond market sell off a little
as well," said Eric Lascelles, chief Canada macro strategist at
TD Securities.
 The jobs figures will not likely sway the Bank of Canada in
hiking interest rates this month, but suggests the central bank
may raise rates sooner than some expect.
 Expectations remained firm, as measured by a Reuters
calculation of yields on overnight index swaps, that the Bank
of Canada will likely keep interest rates unchanged at its next
rate decision on Jan. 18.
 The central bank halted its rate-hiking campaign after
three successive increases last year in part to gauge the
patchy U.S. recovery.
 Canadian government bond prices were lower across the curve
after the forecast-beating jobs figures, underperforming U.S.
Treasuries as attention turned to U.S. jobs figures, due at
8:30 a.m. EST (1330 GMT)
 Prices will likely remain under pressure as market
participants anticipated a relatively strong reading. U.S.
employers likely stepped up hiring in December, with
expectations of 175,000 jobs created, after adding a meager
39,000 jobs in November. The unemployment rate is seen edging
down only slightly. [ID:nLDE70602A]
 The interest-rate sensitive two-year bond CA2YT=RR fell 9
Canadian cents to yield 1.792 percent, while the 10-year bond
CA10YT=RR dropped 45 Canadian cents to yield 3.224 percent.
  (Reporting by Ka Yan Ng and Claire Sibonney; editing by
Jeffrey Benkoe)

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