October 7, 2010 / 6:17 PM / 10 years ago

CANADA FX DEBT-C$ falls from 5-month high ahead of jobs data

 * Falls to 98.04 U.S. cents
 * Charge toward U.S. dollar parity stalls
 * Canadian bond prices mixed
 (Updates to midday, adds quote)
 By Jennifer Kwan
 TORONTO, Oct 7 (Reuters) - The Canadian dollar retreated
from its recent charge to parity with its U.S. counterpart on
Thursday as the greenback rebounded and commodity and stock
prices weakened.
 The U.S. dollar regained its footing after slipping to a
15-year low versus the Japanese yen. And, as traders bet
momentum had swung too far, too fast, commodity prices pulled
away from gains that had pushed gold to record highs.
 The U.S dollar had been battered in recent sessions on
growing prospects of more money-printing by the U.S. Federal
Reserve to revive the U.S. economy. The Canadian dollar hit a
five-month high against the greenback on Wednesday.
 "Nowadays you have to look at what's going on with the big
dollar. The big dollar looked very vulnerable early on and now
it's up on the day," said David Watt, senior currency
strategist at RBC Capital Markets.
 "Sterling has fallen back, the euro has fallen back, oil
prices are also lower. We've also got some measure of risk
aversion playing through markets."
 Given the power of the recent U.S. dollar sell-off, it is
unreasonable not to expect a pause, Watt said. He added
investors may also be cautious ahead of the imminent start of
earnings season, and ahead of U.S. and Canadian September jobs
reports on Friday.
 At around 1:40 p.m. (1740 GMT), the Canadian dollar
CAD=D4 was at C$1.0200 to the U.S. dollar, or 98.04 U.S.
cents, down from Wednesday's finish of C$1.0107 to the U.S.
dollar, or 98.94 U.S. cents.
 On Wednesday, the Canadian dollar rose as high as C$1.0063
to the U.S. dollar, or 99.37 U.S. cents, its highest level
since April 30.
 Oil, a key Canadian export, fell below $82 a barrel and
gold sank from a record high above $1,364 an ounce. [O/R]
  A report on Thursday showed the value of Canadian building
permits issued in August plunged 9.2 percent from July, well
below market expectations, on weakness in the nonresidential
sector. [ID:nN07]
 Still, it is "all about data tomorrow," said Steve Butler,
director of foreign exchange trading at Scotia Capital.
 "We'll have to see what the employment data looks like in
Canada and the U.S. That's going to be the main driver," he
 U.S. nonfarm payrolls were likely unchanged in September
[ID:nN05187700], while Canada is seen adding 10,000 jobs.
 Canadian bond prices were in line with U.S. Treasuries,
where the short end gained on anxiety about the upcoming jobs
data and on expectations that the U.S. Federal Reserve will
take steps to make credit easier. [US/]
 The two-year bond CA2YT=RR rose 4 Canadian cents to yield
1.333 percent, while the 10-year bond CA10YT=RR edged 2
Canadian cents lower to yield 2.753 percent.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)

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