March 8, 2019 / 2:53 PM / 4 months ago

CANADA FX DEBT-C$ rallies on jobs surge as bets slashed on BoC rate cut

    * Canadian dollar rises 0.3 percent against the greenback
    * Domestic jobs rise 55,900 in February
    * Price of U.S. oil falls 3 percent
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, March 8 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday, as
investors slashed bets on an interest rate cut this year by the
Bank of Canada after domestic data showing a surprise jump in
jobs in February.
    Employers added 55,900 jobs in February, which was the third
month of outsized gains in the last four and exceeded the 20,000
jobs created in the United States for the same month. Analysts
had forecast February job numbers to be flat in Canada.
            
    Chances of an interest rate cut by December, which had
climbed this week on a more dovish tone from the Bank of Canada,
fell to 20 percent from nearly 40 percent before the data, the
overnight index swaps market indicated.           
    "I think if you look at this big picture it is an argument
for the Bank of Canada to remain on the sidelines in the near
term, rather than one for them to consider eases," said Andrew
Kelvin, senior rates strategist at TD Securities.
    The Bank of Canada has raised interest rates 125 basis
points since July 2017. Its benchmark rate is at 1.75 percent.
    At 9:31 a.m. (1431 GMT), the Canadian dollar          was
trading 0.3 percent higher at 1.3419 to the greenback, or 74.52
U.S. cents. The currency, which touched on Thursday its weakest
in more than two months at 1.3467, traded in a range of 1.3391
to 1.3466.
    Gains for the loonie came despite a drop in the price of
oil, one of Canada's major exports, after the European Central
Bank warned of continued weakness and fresh data showed Chinese
imports and exports slumped last month.             
    U.S. crude        prices were down 3 percent at $54.94 a
barrel.
    Separate data, from the national housing agency, showed that
Canadian housing starts tumbled about 16 percent in February as
groundbreaking on urban single-detached and multiple unit homes
declined.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 5 Canadian cents to
yield 1.651 percent and the 10-year             falling 7
Canadian cents to yield 1.771 percent.
    Before the jobs data, the 2-year yield touched its lowest
intraday since December 2017 at 1.593 percent.         

 (Reporting by Fergal Smith
Editing by Susan Thomas)
  
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