CANADA FX DEBT-C$ firms as US jobs data outweighs Canadian

Fri Mar 9, 2012 10:15am EST

* C$ at C$0.9895 vs US$, or $1.0105

* Bond prices mixed

* Strong U.S. jobs data trumps weak Canada data

By Jon Cook

TORONTO, March 9 (Reuters) - The Canadian dollar firmed against the greenback on Friday morning as the market looked past weak domestic employment numbers and was encouraged by stronger-than-expected U.S. jobs data, a further signal of recovery in Canada's biggest trading partner.

"We're in a state now where the Canadian dollar is more severely affected - and positively affected in this case - by U.S. data than it is by our own," said Firas Askari, head of foreign exchange trading at BMO Capital Markets

Figures on Friday showed showed U.S. employers added 227,000 jobs last month, outpacing estimates of 210,000 new jobs. It was the first time in a year that payrolls have grown by more than 200,000 for three straight months.

In Canada, the economy lost 2,800 jobs in February as the creation of 9,100 full-time jobs was offset by 12,000 fewer part-time positions.

The Canadian unemployment rate dropped to 7.4 percent from 7.6 percent in January, but that was because fewer people searched for work.

The Canadian dollar rose as high as at C$0.9880, its highest level in nearly a week, after the release of the U.S. employment number. Earlier in the session it hit a low of C$0.9942 after the release of the Canadian data.

"Clearly another month of disappointing labor market numbers," said Paul Ferley, assistant chief economist at Royal Bank of Canada. "It provides a reason for the Bank (of Canada) not to be in any rush to start tightening."

Twenty-four hours earlier, Canada's central bank expressed optimism about the Canadian economy, but held its key lending rate unchanged at ann ultra-low 1 percent for the 18th consecutive month.

At 9:40 a.m. (1440 GMT), the Canadian dollar stood at C$0.9895 versus the U.S. dollar, or $1.0105, up from Thursday's North American close of C$0.9911 to the U.S. dollar, or $1.0090.

The Canadian dollar was also outperforming most global currencies on the crosses.

"Generally it's been a good news second half of the week for the Canadian dollar and global economy," Askari said. "The U.S. economy is showing signs of serious rebounding and strength, my concern is more with Europe still not having solved its key issues."

On Thursday, markets were heartened after Greece won 85.8 percent acceptance from its private creditors for a bond swap deal, but investors continued to fret about whether Greece or other weak euro zone economies may need more funds in the future, especially given a weak euro zone economy.

David Bradley, director of foreign exchange trading at Scotia Capital, said he expected the Canadian currency to stay within a range of C$0.9850 to C$1.0050 against the U.S. dollar for Friday and the balance of the month.

Canadian bond prices were mixed, with the two-year bond up a Canadian cent to yield 1.171 percent. The 10-year bond rose 3 Canadian cents to yield 2.008 percent.

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