Markets News

CANADA FX DEBT-C$ posts 1-month high as jobs gain cements steady rate outlook

 (Adds strategist quotes and additional details, updates prices)
    * Canadian dollar rises 0.8% against the greenback
    * Canada adds 53,700 jobs in September
    * Price of U.S. oil increases 2.2%
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, Oct 11 (Reuters) - The Canadian dollar strengthened
to a one-month high against its U.S. counterpart on Friday after
domestic data showing a much bigger-than-expected jobs gain in
September supported bets for the Bank of Canada to keep interest
rates on hold this month.    
    The Canadian economy added 53,700 jobs in September, the
second straight month of robust jobs gains, Statistics Canada
data showed. Analysts had forecast a gain of 10,000
    "A huge labour market print has helped the loonie take more
ground against the U.S. dollar today," Simon Harvey, FX market
analyst for Monex Europe and Monex Canada, said in a note.
"Markets are now pricing a Bank of Canada rate cut at the end of
the month as a slim probability."
    Chances of a Bank of Canada interest rate cut at the October
30 policy decision dipped to 7% from 9% before the data, the
overnight index swaps market indicated.           
    The central bank has kept its benchmark rate on hold at
1.75% this year even as other central banks, including the
Federal Reserve and the European Central Bank, have eased.
    At 2:38 p.m. (1838 GMT), the Canadian dollar          was
trading 0.8% higher at 1.3184 to the greenback, or 75.85 U.S.
cents. The currency, which was up 0.9% for the week, touched its
strongest intraday level since Sept. 11 at 1.3171.
    Rising investor hopes that talks between U.S. President
Donald Trump and Chinese Vice Premier Liu He would culminate in
a partial trade deal added to support for the loonie.
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from reduced trade uncertainty.
    Oil prices climbed after Iranian media said a state-owned
oil tanker had been struck by missiles in the Red Sea near Saudi
Arabia. U.S. crude oil futures        settled 2.2% higher at
$54.70 a barrel.             
    Canadian government bond prices fell across the yield curve,
with the two-year            down 19 Canadian cents to yield
1.653% and the 10-year             falling 100 Canadian cents to
yield 1.519%.
    Canada's 2-year yield climbed 4.1 basis points further above
its U.S. equivalent to a spread of 5.5 basis points, the biggest
gap in favor of the Canadian bond since October 2017.
    It was an early close for the bond market ahead of a market
holiday on Monday in observance of Thanksgiving Day.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Louise Heavens)