CANADA FX DEBT-C$ strongest since mid-May on robust jobs data

Fri Jun 7, 2013 9:19am EDT

* C$ hits C$1.0166 vs US$, or 98.37 U.S. cents

* Canadian jobs number pushes C$ to strongest in 3 weeks

* Government debt yields spike

By Alastair Sharp

TORONTO, June 7 (Reuters) - The Canadian dollar hit its strongest level against the U.S. dollar since mid-May on Friday after data showed the Canadian economy added a robust 95,000 jobs last month.

The stellar performance beat market expectations for a 15,000 gain and was the largest monthly addition of new jobs in 11 years.

The more globally significant U.S. non-farm payrolls report released at the same time showed modest growth roughly in line with market expectations.

"It's tough to imagine a better combination for the Canadian dollar. You've got a U.S. economy that's still growing relatively healthily, not as well as everybody would hope for, but a decent U.S. number and a spectacular Canadian number," said Doug Porter, chief economist at BMO Capital Markets.

"It really doesn't get any better than that for the Canadian dollar," he said.

The currency traded as strong as C$1.0166 to the greenback, or 98.37 U.S. cents, after the jobs reports, before paring back to C$1.0220. That compared with C$1.0250 just before the news and C$1.0260 at Thursday's North American close.

"An as expected report from the U.S. let the Canadian dollar rally significantly on the back of much stronger Canadian numbers," said Camilla Sutton, chief currency strategist at Scotiabank.

The price of Canadian government debt plunged across the curve, with the two-year bond down 10 Canadian cents to yield 1.101 percent, its highest yield since February.

The benchmark 10-year bond fell 27 Canadian cents to yield 2.074 percent, testing highs last seen in May 2012.

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