Friday March 6, 2009 - 22:03:24 GMT
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Reuters - www.reuters.com
Forex News - CANADA FX DEBT-C$ edges higher, bonds drop as supply awaits
* Canadian dollar closes at 77.73 U.S. cents
* C$ gains early after U.S. jobs data, then retreats
* Bonds drop, face slew of supply next week
(Updates to close)
By Ka Yan Ng
TORONTO, March 6 (Reuters) - The Canadian dollar finished
slightly higher against the U.S. currency on Friday after
giving up most of the early gains made after a U.S. jobs report
that was not as bad as some had feared.
The Canadian dollar <CAD=> finished at C$1.2865 to the U.S.
dollar, or 77.73 U.S. cents, up from Thursday's close at
C$1.2884 or 77.62 U.S. cents.
The currency climbed as high as C$1.2765 to the U.S.
dollar, or 78.34 U.S. cents, after data showed the U.S. economy
shed 651,000 jobs in February, pushing the unemployment rate to
its highest level in 25 years. [ID:nN05339652].
The jobs figure was close to a drop of 648,000 in nonfarm
payrolls that had been forecast by economists polled by
Reuters, though some had predicted losses as high as 800,000.
The U.S. jobs data provided a promising start for equity
markets, which initially headed higher in relief. But as the
stocks rally fizzled, so did the climb by the Canadian dollar.
The currency has recently been strongly correlated to the
Toronto stock market -- partly as a reaction to risk appetite
as well as their common link to underlying commodity prices,
and especially to oil, a key Canadian export.
"Global risk was better this morning, now it's off the
boil," said Jack Spitz, managing director of foreign exchange
at National Bank Financial.
"It's trading more or less tick for tick with the
directional bias in equities."
Next week, the data calendar for Canada is fairly quiet
until Friday's jobs figures for February so global events will
continue to be the main drivers for the currency.
For the week, the Canadian dollar was down 1.1 percent.
BONDS DROP AS SUPPLY IN THE WINGS
Canadian bond prices were lower across the curve,
underperforming their U.S. counterparts, as a wave of supply
was set to hit the market next week.
Bonds initially turned lower following the U.S. jobs
report, and amid the early strength in equity markets.
But when stocks turned lower, bonds didn't push higher in
the usual inverse relationship with equities. Instead they
continued lower as investors worried about the prospect of
markets absorbing $63 billion in U.S. government notes and
"The data really is secondary. Unless the data really
deviates much from expectations its not going to have much of
an impact," said Sheldon Dong, fixed income analyst at TD
Waterhouse Private Investment.
"I think what will impact is the ability for the market to
absorb all the new issue supply."
Canadian bonds have had a strong week, so some
position-squaring ahead of the weekend may also be taking
place, he added.
The two-year bond fell 6 Canadian cents to C$103.07 to
yield 0.955 percent. The 10-year bond lost 19 Canadian cents to
C$107.11 to yield 2.939 percent.
The 30-year bond dropped 90 Canadian cents to C$124.45 and
yielded 3.611 percent.
(Editing by Rob Wilson)
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