November 2, 2018 / 7:48 PM / a month ago

CANADA FX DEBT-C$ slips as domestic data caps December rate hike bets

 (Adds dealer quotes and details on activity; updates prices)
    * Canadian dollar edges 0.1 percent lower against the
greenback
    * Canada adds 11,200 jobs in October
    * Price of U.S. oil falls 0.9 percent
    * Canadian bond prices fall across steeper yield curve

    By Fergal Smith
    TORONTO, Nov 2 (Reuters) - The Canadian dollar dipped
against a broadly stronger greenback on Friday, reversing from
an earlier one-week high, after the release of domestic jobs
data that was not firm enough to raise bets for another Bank of
Canada interest rate hike next month.
    The Canadian economy added 11,200 jobs in October on higher
full-time hiring, and the unemployment rate fell to 5.8 percent,
although wage growth was sluggish, Statistics Canada data
indicated.             
    Separate data showed that Canada's trade deficit in
September shrank to C$416 million as imports fell at a faster
pace than exports.             
    "We are still in an environment where the path is towards
higher rates," said Andrew Kelvin, senior rates strategist at TD
Securities. "But nothing here suggests the Bank of Canada is
behind the curve."
    Last week, the central bank raised its key interest rate by
25 bps to a level of 1.75 percent, its fifth hike since July
2017. Chances of another hike in December edged lower to 28
percent from 30 percent before the data, the overnight index
swaps market indicated.           
    At 3:19 p.m. (1919 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3102 to the greenback, or 76.32
U.S. cents. The currency, which was unchanged for the week,
touched its strongest intraday since Oct. 25 at 1.3050, before
the data.
    The loonie's modest decline on Friday came as a
stronger-than-expected U.S. jobs gain helped boost the greenback
      .
    "The big dollar began to exert its dominance," said Michael
Goshko, a corporate risk manager at Western Union Business
Solutions. "You are also seeing a continuation of the soft
commodities story."
    Oil fell as investors worried about oversupply when the
United States said it will temporarily spare eight jurisdictions
from Iran-related sanctions. U.S. crude oil futures       
settled 0.9 percent lower at $63.14 a barrel.             
    U.S. stocks retreated for the first time in four days after
White House economic adviser Larry Kudlow deflated optimism over
U.S.-China trade talks.             
    Canada is a major exporter of commodities, including oil, so
its economy could be hurt if the trade dispute between the
United States and China hurts the outlook for global growth.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 2 Canadian cents to yield 2.35 percent and the
10-year             declined 33 Canadian cents to yield 2.534
percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Chizu Nomiyama)
  
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