* C$ at C$0.9871 versus US$, or $1.0131
* Strong Canada jobs data boosts currency
* Subdued hiring in U.S. limits gains
* C$ gains 1 pct for week
By Alastair Sharp
TORONTO, Jan 4 The Canadian dollar gained
sharply against its U.S. counterpart on Friday after Canada
added a surprisingly robust 39,800 jobs in December, but the
stronger move was hindered by a relatively subdued rate of
hiring in the United States.
The positive shock of the Canadian employment data in the
morning caused an immediate reaction, which was moderated
somewhat in afternoon trade.
"A lot of people were caught flat-footed and you did see
quite a bit of stop-loss selling of (U.S. dollars)," said Blake
Jespersen, a managing director for foreign exchange sales at BMO
"You're starting to see it trade back a little bit higher as
some (U.S. dollar) buyers come in, some value players and some
Canadian corporates looking to lock in at a decent level."
The Canadian dollar ended trade at C$0.9871 to the
greenback, or $1.0131, compared with C$0.9880, or $1.0121, at
Thursday's North American close. It touched C$0.9848 at one
point soon after the jobs data were released.
The close resulted in a 1 percent gain for the week,
according to Thomson Reuters data. The currency hit a 5-week low
last Friday while U.S. lawmakers were still shy of an agreement
to avoid fiscal calamity.
Jesperson said Canada's currency would likely keep bottoming
out in the mid-98 range as U.S.-dollar buyers emerge at that
Canada defied expectations with the outsized employment
gains, all of which came in full-time jobs and mostly in the
Meanwhile, the pace of hiring by U.S. employers eased
slightly last month.
But despite the strong Canada jobs data, the third such
outsized gain in four months, doubts remained over whether such
growth was sustainable in the face of slower economic growth.
A Reuters poll published earlier on Friday pointed to
headwinds for the Canadian dollar in the near term before some
strengthening to trade at C$0.98 in three, six and twelve
"As good as these numbers were, and have been over the last
couple of months, there is still a sense that the levitation act
on jobs can't continue for much longer," said Mark Chandler,
head of Canadian fixed income and currency strategy at Royal
Bank of Canada.
Canada has notched subdued inflation and gross domestic
product data in recent months, complicating the central bank's
stated aim of eventually raising interest rates.
Still, overnight index swaps, which trade based on
expectations for the central bank's key policy rate, showed that
traders increased bets on a rate hike in late 2013 after the
The spread between yields on Canadian and U.S. government
debt widened across most of the curve after the data, as traders
priced in the increased likelihood of a Bank of Canada rate
The two-year Canadian bond slipped 4 Canadian
cents to yield 1.207 percent, and the benchmark 10-year bond
fell 12 Canadian cents to yield 1.941 percent.