November 8, 2019 / 9:02 PM / 13 days ago

CANADA FX DEBT-C$ hits 3-week low as jobs miss adds to rate cut bets

    * Canadian dollar falls 0.4% against the greenback
    * Loonie hits a three-week low at 1.3237
    * Canada sheds 1,800 jobs in October
    * Canadian bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, Nov 8 (Reuters) - The Canadian dollar weakened to a
three-week low against its U.S. counterpart on Friday as data
showing a surprise decline in domestic jobs added to pressure on
the currency since the Bank of Canada shifted to a more dovish
stance.
    Canada lost 1,800 jobs in October after robust job growth
over the previous two months, data from Statistics Canada
showed. Analysts had expected jobs to rise by 15,900.
            
    "USD-CAD was already drifting higher off the lows we saw in
the last couple of weeks because of concern around changing
sentiment and the Bank of Canada," said Brad Schruder, director
of corporate sales and structuring at BMO Capital Markets. 
    Last week, the Bank of Canada left the door open to an
interest rate cut as it expressed concern about trade
uncertainty.             
    Chances of an easing at the central bank's next meeting in
December rose to about 25% from 15% before the jobs data, the
overnight index swaps market indicated.           
    The loonie could weaken by "another penny, penny-and-a-half"
to a level that would then attract buying of the currency by
Canadian corporates, Schruder said.
    Housing data also showed declines.
    Statistics Canada said that the value of Canadian building
permits dropped by a larger-than-expected 6.5% in September to
C$8.3 billion, while data from the Canadian Mortgage and Housing
Corporation (CMHC) showed that the seasonally adjusted
annualized rate of housing starts fell to 201,973 units in
October from a revised 221,135 units in September.             
    At 3:30 p.m. (2030 GMT), the Canadian dollar          was
trading 0.4% lower at 1.3228 to the greenback, or 75.60 U.S.
cents. The currency touched its weakest intraday level since
Oct. 16 at 1.3237.
    For the week, the loonie was down 0.7%.
    The currency's decline came as U.S. President Donald Trump
said he had not agreed to roll back tariffs on Chinese goods,
denting investor optimism that the United States and China would
reach a trade deal.             
    Canada is a major exporter of commodities, including oil, so
its economy could be hurt by a prolonged trade war. U.S. crude
oil futures        clawed back its earlier decline to settled
0.2% higher at $57.24 a barrel.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 8.5 Canadian cents to
yield 1.584% and the 10-year             rising 32 Canadian
cents to yield 1.581%.
    On Thursday, the 10-year yield touched its highest intraday
level since May 24 at 1.650%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and Diane
Craft)
  
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