October 8, 2010 / 12:22 PM / in 10 years

CANADA FX DEBT-C$ pares losses after Canada jobs data

 * C$ down but recovers a bit after hitting session low
 * Canada unexpectedly loses 6,600 jobs in Sept
 * Bonds hold lower ahead of U.S. September jobs report
 (Adds details)
 By Ka Yan Ng
 TORONTO, Oct 8 (Reuters) - Canada's dollar fell against the
U.S. currency on Friday after the domestic economy unexpectedly
lost 6,600 jobs in September, which further cemented views that
the Bank of Canada will pause later this month its campaign to
raise rates.
 Economists said the data's details were not as dire as the
overall loss of jobs would suggest. The unemployment rate edged
down to 8.0 percent from 8.1 percent in August.
 But the downbeat headline of a jobs loss for the month does
add to a raft of recent statistics showing the Canadian economy
is slowing down after a swift start this year. [ID:nSCL8LE66H]
 "Overall this report is not disastrous. Certainly it
supports the growing market participants' view out there that
the Bank of Canada will take a pause on Oct. 19," said
Sebastien Lavoie, assistant chief economist at Laurentian Bank
 The market is pricing in nearly a 90 percent likelihood
that the central bank will hold rates at 1 percent later this
month, based on a Reuters calculation of yields on overnight
index swaps. BOCWATCH
 At 7:55 a.m. (1155 GMT), the Canadian dollar CAD=D4 was
at C$1.0218 to the U.S. dollar, or 97.87 U.S. cents, recovering
from a session low at C$1.0238 to the U.S. dollar, or 97.68
U.S. cents, hit immediately after the data. It was also weaker
than Thursday's close at C$1.0185 to the U.S. dollar, or 98.18
U.S. cents.
 "The Canadian dollar seemed to anticipate this by softening
up in the hour leading up. Obviously it is fodder for further
Canadian dollar weakness, but again, the market may be forced
to reconsider the magnitude of that weakness because that
negative headline perhaps overstates the true weakness of the
report," said Eric Lascelles, chief Canada macro strategist at
TD Securities.
 Canadian government bond prices showed a muted reaction
following the domestic jobs data, with market participants
looking ahead to the U.S. nonfarm payrolls report.
 A weak jobs report in the United States could boost chances
the Federal Reserve will print more money in an effort to
support the economic recovery. The data, due at 8:30 a.m.,
(1230 GMT), is forecast to show the U.S. economy added no jobs
in September. ECONUS
 The two-year bond CA2YT=RR was off 1 Canadian cent to
yield 1.338 percent, while the 10-year bond CA10YT=RR edged
down 7 Canadian cents to yield 2.758 percent.
 (Editing by Padraic Cassidy)

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