November 2, 2018 / 1:40 PM / 16 days ago

CANADA FX DEBT-C$ slips as domestic data caps December rate hike bets

    * Canadian dollar retreats 0.1 percent against the greenback
    * Canada adds 11,200 jobs in October
    * Price of U.S. oil falls 0.9 percent
    * Canadian bond prices trade mixed across steeper yield
curve

    By Fergal Smith
    TORONTO, Nov 2 (Reuters) - The Canadian dollar dipped
against the greenback on Friday, retreating from an earlier
one-week high, after the release of domestic jobs and trade data
that was not strong enough to raise bets for another Bank of
Canada interest rate hike next month.
    The Canadian economy added 11,200 jobs in October on higher
full-time hiring, and the unemployment rate dipped to 5.8
percent, although wage growth was sluggish, Statistics Canada
data indicated.             
    Separate data showed that Canada's trade deficit in
September shrank to C$416 million as imports fell at a faster
pace than exports, while August imports had been almost C$1
billion higher than initially reported.             
    "We are still in an environment where the path is towards
higher rates," said Andrew Kelvin, senior rates strategist at TD
Securities. "But nothing here suggests the Bank of Canada is
behind the curve."
    Last week, the central bank raised its key interest rate by
25 bps to a level of 1.75 percent, its fifth hike since July
2017. Chances of another hike in December were little changed at
about 30 percent after the data.           
    At 9:12 a.m. (1312 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3102 to the greenback, or 76.32
U.S. cents. The currency touched its weakest intraday since Oct.
25 at 1.3050.
    The loonie's decline came as a stronger-than-expected U.S.
jobs gain helped support the greenback       .
    U.S. job growth rebounded sharply in October and wages
recorded their largest annual gain in 9-1/2 years, pointing to
further labor market tightening that could encourage the Federal
Reserve to raise interest rates again in December.             
    Global stocks advanced as U.S. President Donald Trump fueled
hopes of a renewed dialogue between Washington and China for
resolving their bilateral trade issues.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade.
    U.S. crude        prices were down 0.9 percent at $63.12 a
barrel. Oil has been pressured this week by fears of global
oversupply.             
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            up 0.5 Canadian cent
to yield 2.337 percent and the 10-year             falling 10
Canadian cents to yield 2.506 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas)
  
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