Friday April 4, 2008 - 23:35:13 GMT
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Reuters - www.reuters.com
Forex Market News - Canadian dollar ends winning week on a lower note
By Frank Pingue
TORONTO, April 4 (Reuters) - The Canadian dollar closed
lower versus the U.S. dollar on Friday as data showed job
growth moderated in Canada in March after two solid months, but
the currency still ended the week with a 1.2 percent gain.
Canadian bond prices finished higher across the curve as
the jobs report was followed by U.S. jobs data that persuaded
many investors that more aggressive interest rate cuts in the
United States will be needed to stimulate the economy.
The Canadian dollar closed at C$1.0093 to the U.S. dollar,
or 99.07 U.S. cents, down from C$1.0044 to the U.S. dollar, or
99.56 U.S. cents, at Thursday's close.
At one point in the session the Canadian currency fell to
C$1.0101 to the U.S. dollar, or 99.00 U.S. cents, but three
successive days of rises heading into the week's final session
proved enough to insure that it rose for a second straight
Details of the Canadian March jobs report signaled a
softening jobs market and slowing economy, which supported
calls for another Bank of Canada rate cut when the bank next
sets interest rates on April 22.
"The jobs report came in close to expectations but the
underlying details were even weaker with all of the strength
being in part-time jobs and full-time jobs actually declining
and offsetting part of that number," said David Powell,
currency analyst at IDEAglobal in New York.
"We just had some further signs of a story that we already
knew about in Canada. The economy is weakening and the Bank of
Canada is going to continue to cut rates and that weighed on
the Canadian dollar."
The Bank of Canada has cut its overnight lending rate by
100 basis since December to 3.50 percent, which narrowed the
gap with the U.S. Federal Reserve's 2.25 percent rate.
Despite the Canadian dollar's overall gain for the week, it
is still stuck in a range, around U.S. dollar parity, that it
has occupied for the better part of four months.
Powell said it will take a move below C$1.0115 by the
Canadian dollar for it to be considered out of that range.
BONDS POST GAINS
Canadian bond prices were higher as talk about further Fed
rate cuts persuaded investors to put their money in more secure
assets such as government debt.
The U.S. data showed a third straight month of declines in
nonfarm payrolls, which managed to rein in recent talk that the
worst of the credit crisis has passed.
"The report is just another indication that labor markets
remain weak ... and with that expectations are rising in terms
of the extent of further easing by the Fed," said Paul Ferley,
assistant chief economist at Royal Bank of Canada.
"We just got this sort of this great pessimism about the
U.S. economy playing out in U.S. markets and it spilled over
into Canadian markets."
Canadian economic data due next week include a building
permits report for February on Monday and housing starts
figures for March on Tuesday.
The two-year bond rose 14 Canadian cents to C$102.06 to
yield 2.755 percent. The 10-year bond climbed 47 Canadian cents
to C$103.68 to yield 3.525 percent.
The yield spread between the two- and 10-year bonds was
77.0 basis points, up from 74.7 basis points at the previous
The 30-year bond rose 60 Canadian cents to C$117.15 to
yield 3.998 percent. In the United States, the 30-year treasury
yielded 4.312 percent.
The three-month when-issued T-bill yielded 2.06 percent, up
from 2.05 percent at the previous close.
(Editing by Peter Galloway)
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