CANADA FX DEBT-C$ powers to 3-week high on robust jobs data

Fri Jun 7, 2013 4:39pm EDT

* C$ hits C$1.0198 vs US$, or 98.06 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.

"Eighty percent was full-time status, which is certainly encouraging. There is an element of skepticism with such a stellar number, that it could be revised lower over the next couple of months," said Gareth Sylvester, director at Klarity FX in San Francisco.

"We do take it with a pinch of salt, but certainly the FX markets ran with it and we saw USD/CAD immediately push higher."

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

The currency finished at C$1.0198 versus the greenback, or 98.06 U.S. cents, after trading as strong as C$1.0166, or 98.37 U.S. cents, after the jobs reports. That compared with C$1.0250 just before the news and C$1.0260 at Thursday's North American close.

"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 price of Canadian government debt plunged across the curve, with the two-year bond down 15 Canadian cents to yield 1.131 percent, its highest yield since February.

The benchmark 10-year bond fell 92 Canadian cents to yield 2.149 percent, testing highs last seen in early April 2012.

FILED UNDER: