January 10, 2020 / 9:24 PM / 6 months ago

CANADA FX DEBT-Canadian dollar steadies as jobs gain offsets lower oil prices

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar was little changed against the greenback
    * Canada adds 35,200 jobs in December
    * Price of U.S. oil declines 0.9%
    * Canada-U.S. 2-year spread widens by 2.9 basis points

    By Fergal Smith
    TORONTO, Jan 10 (Reuters) - The Canadian dollar was little
changed against the greenback on Friday, as
stronger-than-expected domestic jobs data helped support the
currency after it was pressured this week by falling oil prices.
    At 3:52 p.m. (2052 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3059 to the greenback, or 76.58
U.S. cents. The currency, which on Thursday hit its weakest
intraday level in nearly two weeks at 1.3104, traded in a range
of 1.3029 to 1.3075.
    For the week, the loonie was down 0.5%, giving back some of
the 5% gain it posted in 2019, when it was the top-performing
G10 currency.    
    "The market still likes the Canadian dollar and doesn't want
to go into a weakening cycle for it," said Amo Sahota, director
at Klarity FX in San Francisco. "It was a darling at the end of
last year and the market wants to bank on that at the beginning
of this year."
    Speculators have more-than doubled their bullish bets on the
Canadian dollar, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed on Friday. As of Jan.
7, net long positions had increased to 26,367 contracts from
11,913 in the prior week.    
    "It is one of the better positioned G10 currencies out there
from the economics and the monetary policy side," Sahota said.
    Canada's economy added 35,200 jobs in December, exceeding
the gain of 25,000 that economists had forecast, while the
unemployment rate fell to 5.6%, official data showed.
            
    Chances that the Bank of Canada would cut interest rates by
July fell to about 30% from nearly 40% before the release of the
data, the overnight index swaps market showed.           
    The central bank left its benchmark rate on hold at 1.75% in
2019 even as some of its counterparts, such as the Federal
Reserve, eased.            
    U.S. crude oil futures        settled 0.9% lower at $59.04 a
barrel, adding to their decline since Wednesday, when the threat
of a wider conflict between the United States and Iran receded.
Oil is one of Canada's major exports.             
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 4 Canadian cents
to yield 1.659% and the 10-year             rising 11 Canadian
cents to yield 1.592%.
    Canada's 2-year yield rose 2.9 basis points further above
the yield on its U.S. counterpart to a spread of 9.1 basis
points, after U.S. data showed a weaker-than-expected December
jobs gain.             

 (Reporting by Fergal Smith; Editing by Paul Simao and Grant
McCool)
  
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