CANADA FX DEBT-C$ gets boost from strong Canadian, soft U.S. jobs data

Fri Sep 6, 2013 9:50am EDT

* C$ firms to C$1.0401 vs US$, or 96.14 U.S. cents
    * Canada creates 59,200 jobs in August vs forecast of 20,000
    * U.S. creates 169,000 jobs vs forecast of 180,000
    * Bond prices rise across maturity curve

    By Solarina Ho
    TORONTO, Sept 6 (Reuters) - The Canadian dollar rallied to
its firmest in about two and a half weeks after August
employment figures were unexpectedly strong in Canada and weaker
than forecast in the United States.
    The Canadian economy created 59,200 jobs last month, nearly
triple the 20,000 jobs economists surveyed by Reuters had
predicted. Most of the rebound was in part-time work, however.
This follows a 39,400 loss in July. The unemployment rate nudged
lower to 7.1 percent from 7.2 percent.
  
    "The headline is outstandingly strong and once again it
reinforces the volatility we've been getting in the Canadian job
numbers," said Craig Alexander, chief economist at
Toronto-Dominion Bank.
    "It's averaging around 12,000 a month, which is a lackluster
pace of employment growth and is consistent with an economy that
is growing at a modest pace."
    In the United States, 169,000 jobs were created, missing
economists' expectations of 180,000 new jobs. The unemployment
rate fell to a 4-1/2 year low as workers gave up looking for
work. 
    "Obviously the mix between Canada and the U.S. is quite
marked and we've seen a violent reaction in the Canadian dollar
in particular," said Doug Porter, chief economist at BMO Capital
Markets.
    The Canadian dollar was trading at C$1.0401 versus
the U.S. dollar, or 96.14 U.S. Cents at 9.00 a.m. (1300 GMT)
after touching as firm as C$1.0387, or 96.27 U.S. cents. This
was more than a cent stronger than Thursday's close at C$1.0506,
or 95.18 U.S. cents.
    The U.S. figures could push back expectations on when the
Federal Reserve will begin trimming its massive bond purchasing.
The central bank was widely expected to begin scaling back
stimulus when it meets in mid-September.
    The data did not change expectations the Bank of Canada will
keep interest rates on hold at its next policy meeting.
  
    A Reuters poll last week showed economists were forecasting
the next interest rate hike would take place during the fourth
quarter of 2014. 
    The currency was mostly outperforming its key counterparts.
It was trading at its strongest level in about five weeks
against the euro and the Japanese yen.
    Prices for Canadian government debt extended gains after the
data, with the two-year bond rising 4 Canadian cents
to yield 1.285 percent and the benchmark 10-year bond
 climbing 41 Canadian cents to yield 2.759 percent.
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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