CANADA FX DEBT-C$ at fresh 4-year lows after Canada sheds jobs

Fri Jan 10, 2014 9:50am EST

* Canadian dollar at C$1.0923 or 91.55 U.S. cents
    * Canadian economy loses 45,900 jobs in Dec
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, Jan 10 (Reuters) - The Canadian dollar hit a
four-year low against the greenback on Friday after data showed
the country unexpectedly shed jobs last month, adding to
concerns about the economy's sluggish performance.
    The report sent the loonie through the psychologically
important C$1.09 level that analysts had thought could provide
support. The currency has fallen in every session this week as
the U.S. dollar appreciated nearly 3 percent against the
Canadian dollar.
    Canada's economy lost 45,900 jobs in December and the
unemployment rate rose in a surprising setback. At the same
time, labor market data south of the border also disappointed as
U.S. employers hired the fewest workers in almost three years.
  
    "For the Canadian dollar, very weak employment data - just
like the trade data did on Tuesday - it just highlights some of
the biggest concerns for the Canadian dollar, which is the
economy not recovering to the extent that many had hoped," said
Camilla Sutton, chief currency strategist at Scotiabank in
Toronto.
    Analysts said the data will likely prompt the Bank of Canada
to maintain a dovish stance. The central bank's policy shift
late last year has dragged the loonie down as investors
anticipate rates will stay low for longer. 
    "For the Bank of Canada, when you look at wages,
decelerating down to 2 percent pretty much reaffirms the bias
that the Bank has about the low inflation backdrop, so that
dovish tone from the Bank of Canada should persist," said Mazen
Issa, macro strategist at TD Securities in Toronto.
    The Canadian dollar was at C$1.0923 to the
greenback, or 91.55 U.S. cents, weaker than Thursday's close of
C$1.0852, or 92.15 U.S. cents. The loonie was not far off its
session low of C$1.0946, its lowest level since October 2009.
    After the Canadian dollar suffered its worst year in 2013
since the financial crisis, investors have returned to 2014
expecting the currency to fall further out of favor.
    The next level to watch for the U.S. dollar-Canadian dollar
pairing will be C$1.10, Sutton said.
    "All in all, I think it's a story where U.S. dollar-Canadian
dollar is likely to move higher over the next six months."
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 10 Canadian
cents to yield 1.050 percent and the benchmark 10-year
 up 55 Canadian cents to yield 2.616 percent.
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