Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

CANADA FX DEBT-C$ recovers from earlier 6-month low as jobs jump

Published 2016-10-07, 09:37 a/m
© Reuters.  CANADA FX DEBT-C$ recovers from earlier 6-month low as jobs jump
USD/CAD
-
PNC
-
CL
-
CA2YT=RR
-
CA10YT=RR
-

* Canadian dollar at C$1.3204, or 75.73 U.S. cents

* Loonie touches its weakest since Mar. 16 at C$1.3297

* Bond prices lower across the maturity curve

By Fergal Smith

TORONTO, Oct 7 (Reuters) - The Canadian dollar strengthened slightly against its U.S. counterpart on Friday, recovering from an earlier six-month low as domestic jobs data diminished prospects of a Bank of Canada interest rate cut.

Canada's economy created 67,200 jobs in September, far more than expected, though that was fueled by the biggest increase in self-employed workers in more than seven years, data from Statistics Canada showed.

"We were expecting some catch-up in this jobs report for September ... we got it, but the composition still looks a little weak," said William Adams, senior international economist at PNC Financial Services Group (NYSE:PNC).

"After solid job growth in September and other recent economic indicators also looking better, combined with benchmark oil prices over $50 a barrel ... we think another Canadian rate cut is quite unlikely," Adams said.

The implied probability of a Bank of Canada rate cut by mid-2017 dipped to 15 percent, overnight index swaps data showed. It was nearly 50 percent before economic data one week ago showed the economy grew more than expected in July.

U.S. employment growth unexpectedly slowed for the third straight month in September, which could make the Federal Reserve more cautious about raising interest rates. 9:27 a.m. EDT (1327 GMT), the Canadian dollar CAD=D4 was trading at C$1.3204 to the greenback, or 75.73 U.S. cents, slightly stronger than Thursday's close of C$1.3207, or 75.72 U.S. cents.

The currency's strongest level of the session was C$1.3187, while it touched its weakest since March 16 at C$1.3297.

U.S. crude CLc1 prices were little changed, up 0.02 percent at $50.45 a barrel, as financial market confidence in the rally came up against a physical excess of crude. O/R

Strategists expect the Canadian dollar to strengthen over the coming year as higher oil prices provide support, but monetary policy divergence and U.S. election risk should restrain the currency in the near term, a Reuters poll found. CAD/POLL

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 2 Canadian cents to yield 0.592 percent and the benchmark 10-year CA10YT=RR falling 20 Canadian cents to yield 1.160 percent.

The 10-year spread versus Treasuries narrowed by 2.7 basis points to -57.6 basis points as Canadian government bonds underperformed after the U.S. and Canadian jobs data. On Wednesday, the spread touched its widest in more than six months at -62.5 basis points.

(Editing by Bernadette Baum)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.