October 5, 2018 / 8:13 PM / in 15 days

CANADA FX DEBT-C$ dips as jobs gain seen not enough to accelerate rate hikes

 (New throughout, updates prices and market activity; adds
economist comments)
    * Canadian dollar falls 0.2 percent against the greenback
    * Loonie touches its weakest since Sept. 28 at 1.2955
    * Canada adds 63,300 jobs in September
    * Canada's 10-year yield nears a 5-year high at 2.615
percent

    By Fergal Smith
    TORONTO, Oct 5 (Reuters) - The Canadian dollar slipped to a
one-week low against its U.S. counterpart on Friday as data
showing a jump in domestic jobs was seen as not enough to
trigger a faster pace of interest rate hikes by the Bank of
Canada.
    The Canadian economy added 63,300 jobs in September,
Statistics Canada data indicated. That was more than twice as
many as analysts had forecast, although all the job gains were
in part-time positions.                 
    In separate data, Canada recorded its first trade surplus
for more than 18 months in August as unusually timed shutdowns
at auto plants helped cut imports at a greater rate than
exports.             
    "The headlines for both reports were much better than
expected, but the details are less upbeat," said Ryan Brecht, a
senior economist at Action Economics.
    Due to the weaker details, there is no additional pressure
on the Bank of Canada "to drop its commitment to gradualism" at
the Oct. 24 policy announcement, Brecht said.
    The central bank, which has raised interest rates four times
since July 2017, said last month that it had discussed whether a
gradual approach to tightening remained appropriate.
    Chances of a hike in October were little changed at about 85
percent after the data, the overnight index swaps market
indicated.           
    At 3:53 p.m. (1953 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.2945 to the greenback, or 77.25
U.S. cents. The currency touched its weakest since Sept. 28 at
1.2955.
    Still, it outperformed the New Zealand dollar, which fell
0.6 percent and the Australian dollar, which was down 0.3
percent.    
    Declines for commodity-linked currencies came as data
showing U.S. wage growth helped push yields on longer-dated U.S.
bonds to multi-year peaks.                  
    For the week, the loonie was down 0.3 percent as the U.S.
dollar broadly climbed.
    On Monday, the Canadian dollar touched its strongest in more
than four months at 1.2783 after a last-minute deal to salvage
the trilateral North American Free Trade Agreement reduced
uncertainty for Canada's economy.        
    U.S. crude oil futures        settled 1 cent higher at
$74.34 a barrel. Oil is one of Canada's major exports.
            
    Canadian government bond prices were lower across a steeper
yield curve, with the 10-year             falling 35 Canadian
cents to yield 2.601 percent. The 10-year yield touched its
highest since January 2014 at 2.615 percent.
    Canada's bond market will be closed on Monday for the
Thanksgiving Day holiday on Monday.

    
 (Reporting by Fergal Smith
Editing by Nick Zieminski and David Gregorio)
  
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