CANADA FX DEBT-C$ strengthens on firm jobs data, U.S. progress

Fri Oct 11, 2013 4:26pm EDT

* C$ at C$1.0354 vs US$, or 96.58 U.S. cents
    * Stronger-than-expected Canadian jobs data supports
currency
    * Hope for U.S. shutdown, debt resolution buoys markets


    By Solarina Ho
    TORONTO, Oct 11 (Reuters) - The Canadian dollar strengthened
on Friday after Canadian employment figures came in stronger
than expected, with the jobless rate falling below 7 percent for
the first time in nearly five years.
    Concern about the U.S. debt-ceiling standoff eased, also
supporting the currency.
    Canada added 11,900 jobs in September and the unemployment
rate dropped to 6.9 percent, mostly due to fewer youths looking
for work, Statistics Canada said.  
    The gain surpassed the 10,000 new jobs forecast by
economists. The jobless rate, which stood at 7.1 percent in
August, touched the lowest since the 6.8 percent in December
2008.
   
    "The employment data was not as bad as people had feared.
There maybe was bit of expectation after the big gain in the
previous month that there'd be more payback. That's not really
the case fortunately, so that helps," said David Tulk, chief
Canada macro strategist at TD Securities.
    Tulk said signs of progress towards ending the U.S.
government shutdown and avoiding a possible U.S. default also
boosted risk-on trade, fueling U.S. stocks and the Canadian
currency.
    "So any potential resolution of this budget impasse and
addressing the risks surrounding the debt ceiling is obviously a
good thing for risk and good thing for the Canadian dollar,"
Tulk said.
    The U.S. Senate is expected to vote over the weekend on
extending the federal borrowing limit through January 2015. 
    President Barack Obama and congressional Republican leaders
worked to end their fiscal impasse on Friday, but struggled to
strike a deal on the details for a short-term reopening of the
federal government and an increase in the U.S. debt limit.
 
    The Canadian dollar ended the North American
session at C$1.0354 versus the greenback, or 96.58 U.S. cents,
up from Thursday's finish at C$1.0396, or 96.19 U.S. cents.
    The loonie touched its firmest level of the day earlier at
C$1.0340, or 96.71 U.S. cents. Its performance was mixed against
other major currencies ahead of Canada's Thanksgiving long
weekend. Thanksgiving Day is Monday.
    Hopes that lawmakers were nearing a deal to avert a U.S.
debt default bolstered global equity markets on Friday, but
trading in short-dated Treasury debt suggests bond-market
investors are concerned the battle will merely be pushed to
later in the year. 
 Fears of a possible U.S. debt default have damaged the
credibility of the world's largest economy and hurt the dollar.
 
    Government bond prices were mostly flat to higher across the
maturity curve. The two-year bond was flat and
yielding 1.211 percent, while the benchmark 10-year bond
 was flat and yielding 2.592 percent.
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