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CANADA FX DEBT-C$ notches 2-week high as trade talks optimism boosts stocks

Published 2019-01-04, 09:57 a/m
© Reuters.  CANADA FX DEBT-C$ notches 2-week high as trade talks optimism boosts stocks
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* Canadian dollar rises 0.4 percent against the greenback

* Canada adds 9,300 jobs in December

* Price of U.S. oil climbs 3.4 percent

* Canadian bond prices fall across the yield curve

By Fergal Smith

TORONTO, Jan 4 (Reuters) - The Canadian dollar strengthened to a two-week high against the greenback on Friday amid investor optimism on trade talks, while bets for no further Bank of Canada interest rate hikes stayed in place after domestic data showing a slower pace of job creation.

At 9:44 a.m. (1444 GMT), the Canadian dollar CAD=D4 was trading 0.4 percent higher at 1.3437 to the greenback, or 74.42 U.S. cents. The currency touched its strongest level since Dec. 19 at 1.3423.

Canada added 9,300 jobs in December on an increase in part-time hiring, slightly more than markets had expected after a record 94,100 jobs were created in the previous month, Statistics Canada data indicated. not great though ... we were due for a pullback in hiring after the very strong November data," said Andrew Kelvin, senior rates strategist at TD Securities.

Money markets expect the Bank of Canada, which has hiked five times since July 2017, to leave its benchmark interest rate on hold at 1.75 percent next week and through the rest of the year. In November, before a sell-off in stocks and oil prices deepened, the market had expected rates to rise to about 2.50 percent by the end of 2019. BOCWATCH

Stocks and the price of oil, one of Canada's major exports, climbed on Friday after China said it would hold trade talks with the United States and a survey showed China's services sector expanded in December. U.S. crude oil futures CLc1 were up 3.40 percent at $48.69 a barrel. U.S. dollar .DXY rose against a basket of major currencies after data showed U.S. job growth surged in December, which could help to allay a recent surge in fears about the economy's health that has roiled financial markets. government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR fell 9.5 Canadian cents to yield 1.816 percent and the 10-year CA10YT=RR declined 61 Canadian cents to yield 1.895 percent.

On Thursday, the 10-year yield touched its lowest intraday level in more than 16 months at 1.814 percent.

Separate data from Statistic Canada showed that Canadian producer prices fell by 0.8 percent in November from October, the largest drop in almost two years, thanks largely to cheaper energy and petroleum products.

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