CANADA FX DEBT-C$ weakens to a 6-month low as risk appetite dips

Published 2016-10-07, 04:48 p/m
© Reuters.  CANADA FX DEBT-C$ weakens to a 6-month low as risk appetite dips
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(Adds portfolio manager quotes, details on Bank of Canada survey, CFTC data, comments by prime minister, updates prices)

* Canadian dollar ends at C$1.3285, or 75.27 U.S. cents

* Loonie touches its weakest since March 16 at C$1.3315

* Bond prices lower across the yield curve

By Fergal Smith

TORONTO, Oct 7 (Reuters) - The Canadian dollar weakened to a six-month low against its U.S. counterpart on Friday as volatility in the foreign exchange market and lower oil prices offset stronger-than-expected domestic jobs data.

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.

"I don't think on its own it's warranted for the Canadian dollar to be where it is," said Hosen Marjaee, senior managing director, Canadian fixed income at Manulife Asset Management, who pointed to the strength of recent domestic data.

Canadian companies' hiring and investment intentions improved modestly in the third quarter, while resource firms believe the sector may be bottoming out after prolonged weakness, the Bank of Canada said. so-called "flash crash" that knocked sterling to a 31-year low and increased tensions between Russia and the United States over Syria have triggered demand for safe-haven currencies such as the Japanese yen JPY= and the U.S. dollar .DXY at the expense of the loonie, Marjaee said.

U.S. employment growth unexpectedly slowed for the third straight month in September. the U.S. jobs data was not so weak as to derail a potential interest rate hike by the Federal Reserve in December, said Marjaee.

The Canadian dollar CAD=D4 ended at C$1.3285 to the greenback, or 75.27 U.S. cents, weaker than Thursday's close of C$1.3213, or 75.68 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$1.3315.

Friday's closing level was above the loonie's 200 day moving average at C$1.3212, according to Reuters data. The currency lost 1.3 percent for the week.

U.S. crude CLc1 prices settled down 63 cents at $49.81 a barrel as investors took profit on recent gains. O/R

Speculators increased bearish bets on the Canadian dollar, Commodity Futures Trading Commission data showed. Net short Canadian dollar positions increased to 14,077 contracts in the week ended Oct. 4 from 11,615 in the prior week.

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 29 Canadian cents to yield 1.17 percent.

The Canadian government is trying to dispense infrastructure investments into the economy as quickly as possible to spur growth, Prime Minister Justin Trudeau said during a Reuters Newsmaker event in Toronto. (Editing by Bernadette Baum and Chris Reese)

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