April 9, 2009 / 2:51 PM / 11 years ago

CANADA FX DEBT-C$ rises with equities, shrugs off jobs data

 * C$ climbs as high as 81.71 U.S. cents
 * Currency shrugs off Canada 61,300 job loss in March
 * Smaller U.S. trade deficit cuts greenback’s appeal
 * Bonds lower as equities rally  (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, April 9 (Reuters) - The Canadian dollar was higher against the U.S. currency on Thursday, rising with equity markets on optimism about the U.S. banking sector and shrugging off big Canadian job losses because they came in lower than the most dire forecasts.
 Data on Thursday showed Canada shed 61,300 jobs in March, while the unemployment rate shot up to a seven-year high. [ID:nN09253705] That was worse than the 55,000 job losses forecast by analysts surveyed by Reuters, but the figure came in under the high-side forecast of 90,000 job losses.
 “Although it was below the consensus, the whisper numbers were that it was going to be even worse, so the fact that is was only minus 60,000 actually seemed to give the market some encouragement,” said David Watt, senior currency strategist at RBC Capital Markets.
 The Canadian dollar also drew strength as equity markets rallied on soaring on optimism about the U.S. banking sector after preliminary quarterly results from Wells Fargo (WFC.N) came in better than expected. [ID:nN09260398]
 Data that showed the U.S. trade gap shrank sharply in February also contributed to the Canadian dollar’s rise.
 “Massive decline in the U.S. trade deficit seems to be the dominant figure from an international perspective,” said Eric Lascelles, chief economics and rates strategist TD Securities.
 “As a result, that’s basically contributing to the unwind of the safe-haven affect, which of course is to the detriment of the U.S. dollar but to the benefit of Canada.”
 Data on Thursday showed the U.S. trade deficit shrank 28.3 percent in February to its lowest level since November 1999. [ID:nN09264963]
 Lascelles said data that showed Canada posted a small trade surplus in February was “moderately successful”, which also lent support to the Canadian currency. [ID:nN09309403]
   At 9:59 a.m. (1359 GMT), the Canadian dollar was at C$1.2247 to the U.S. dollar, or 81.65 U.S. cents, up from C$1.2373 to the U.S. dollar, or 80.82 U.S. cents, at Wednesday’s close.
 Canadian bond prices were lower across the curve as rising stock markets dented the appeal of safe-haven government bonds. [ID:nN09266508]
 “The trade figures are also contributing to a bond market selloff just on optimism and that’s bleeding through not just to the U.S. bond market but also to Canada,” Lascelles said.
 The two-year Canada bond was down 10 Canadian cents at C$100.24 to yield 1.135 percent, while the 10-year bond retreated 62 Canadian cents to C$106.85 to yield 2.961 percent.
 The 30-year bond was down C$1.10 to C$123.05 to yield 3.678 percent. In the United States, the 30-year Treasury yielded 3.7490 percent.  (Additional reporting by Frank Pingue; editing by Peter Galloway)                               

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