CANADA FX DEBT-C$ firms marginally; jobs data in view

Thu Dec 5, 2013 5:37pm EST

* C$ at C$1.0641 (93.98 U.S. cents) vs C$1.0678 on Wednesday
    * C$ down about 2 percent in last three weeks on bearish
sentiment
    * Friday forecasts: Canada added 12,000 jobs; U.S. added
180,000 jobs
    * Bond prices lower across maturity curve

    By Solarina Ho
    TORONTO, Dec 5 (Reuters) - The Canadian dollar halted a week
of losses on Thursday to end moderately stronger against the
greenback, with investors pausing before Friday's data on the
North American labor market.
    Earlier in the session, the Canadian dollar traded near its
weakest level in 3-1/2 years as an unexpectedly dovish tone from
the Bank of Canada reinforced a market view that interest rates
will stay low for some time.
    "Markets had gotten themselves - and probably still are -
pretty long U.S. dollars, and people are becoming increasingly
bearish on Canada and the rate outlook," said Benjamin Reitzes,
senior economist and foreign-exchange strategist at BMO Capital
Markets.
    "Maybe today's just a bit of profit-taking. I'm not entirely
sure the trend is going to change here ... I still suspect we're
moving higher (weaker) for the Canadian dollar."
    The Canadian dollar has retreated some 2 percent over the
last three weeks, dropping through key support levels as
investors turned bearish.
    The Canadian dollar finished at C$1.0641 to the
greenback, or 93.98 U.S. cents, firmer than Wednesday's close of
C$1.0678, or 93.65 U.S. cents.
    The loonie eased as much as C$1.0700 on Thursday, close to
the C$1.0708 hit on Wednesday, which was the currency's weakest
level since May 2010.
    The jobs data south of the border will be key in calibrating
expectations for when the U.S. Federal Reserve might start to
wind down its economic stimulus.
    "The market will be a bit wary about tomorrow's numbers,"
said Dean Popplewell, chief currency strategist at OANDA in
Toronto.
    "Everybody is looking for some sort of indication whether a
Fed taper will be introduced as early as this month."
    Investors are trying to gauge whether the Fed will start to
reduce its $85 billion a month in bond purchases at its next
meeting later in December, or hold off until next year.
    Data on Friday is forecast to show Canada added 12,000 jobs
in November, while the unemployment rate is seen holding at 6.9
percent. In the United States, the economy is expected to have
created 180,000 jobs last month. 
    In a statement that showed the Bank of Canada is
increasingly concerned about possible disinflation, the central
bank on Wednesday said the risks of weak inflation now appear
greater than they did six weeks ago. 
    Wednesday's statement was the first following a policy shift
in October, when the central bank dropped any mention of a rate
hike, catching markets off guard. 
    Government bond prices were mostly lower across the maturity
curve. The two-year bond was off 5 Canadian cents to
yield 1.089 percent, while the benchmark 10-year bond
 fell 18 Canadian cents to yield 2.674 percent.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

Find your dream retirement town

Florida? Hawaii? Reuters has teamed up with Zillow to give you the power to customize a list of your best places to retire.  Video | Full Article