Wednesday February 6, 2008 - 22:22:54 GMT
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Reuters - www.reuters.com
Forex Market News - Canadian dollar rises ahead of key jobs report
By Frank Pingue
TORONTO, Feb 6 (Reuters) - The Canadian dollar rose against
the U.S. dollar on Wednesday as upbeat domestic economic data
offered support, but its move was limited ahead of the more
important jobs report due on Friday.
Domestic bond prices fell across the curve and gave back a
slice of the gains made during the previous session when North
American equity markets tumbled as investors checked out of
The Canadian dollar closed at C$1.0061 to the U.S. dollar,
or 99.39 U.S. cents, up slightly from up from C$1.0072 to the
U.S. dollar, or 99.29 U.S. cents at Tuesday's close.
Early in the session the currency reached its highest level
in just over a week when it hit C$1.0006 to the U.S. dollar, or
99.94 U.S. cents, after domestic data topped forecasts.
The Ivey Purchasing Managers Index, which looks at Canadian
business and government spending, rose unexpectedly in January,
while Canadian building permits beat estimates in December and
reached a record level for all of 2007.
But the Canadian dollar was unable to pop back above the
greenback and eventually gave back most of the early gains as
investors were unable to dismiss the nagging concerns
surrounding the U.S. economy.
"There's so much bad news priced into the U.S. economy and
so many concerns over when that's going to spill into Canada
rather than if," said Steve Butler, director of foreign
exchange trading at Scotia Capital.
"We should be in a feel good mood today but I think we're
just going to be slightly underperforming because of all the
worries about what's happening in the U.S."
Butler also said he does not anticipate much upside for the
Canadian dollar, especially ahead of the more key Canadian job
and housing figures that will be released on Friday.
Analysts, on average, are expecting an increase of 10,000
jobs and an unemployment rate of 6 percent.
In December, the Canadian economy shed fewer jobs than
previously thought, but the number was still more than the
market had been expecting.
The number of jobs lost in December was revised to 2,900
from an earlier reading of 18,700, according to seasonally
adjusted figures released by Statistics Canada. Analysts had
forecast a gain of 15,000 for the period.
A Reuters poll of foreign-exchange strategists released on
Wednesday showed the Canadian dollar is expected to fall
steadily against the U.S. dollar this year as commodity prices
ease and merger-related interest dries up.
Canadian bond prices fell as the latest domestic data left
investors with less of an appetite for the security offered by
It marked a turnaround from Tuesday's session when weak
U.S. Institute for Supply Management data ramped up recession
fears and sent investors out of risky investments like stocks
in favor of bonds.
But the slide in bond prices was contained ahead of the
jobs data due later in the week.
"I would think the markets are waiting for that (jobs)
report before they place big bets," said Sal Guatieri, senior
economist at BMO Capital Markets.
The two-year bond fell 3 Canadian cents to C$102.10 to
yield 3.046 percent. The 10-year bond slipped 25 Canadian cents
to C$101.60 to yield 3.793 percent.
The yield spread between the two- and 10-year bond was 74.7
basis points, up from 68.8 points at the previous close.
The 30-year bond fell 75 Canadian cents to C$114.30 to
yield 4.151 percent. In the United States, the 30-year treasury
yielded 4.368 percent.
The three-month when-issued T-bill yielded 3.28 percent,
down from 3.35 percent at the previous close.
(Editing by Janet Guttsman)
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