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C$ firms after dismal US jobs data casts doubt on Fed hike

C$ firms after dismal US jobs data casts doubt on Fed hikeTORONTO: The Canadian dollar rallied to a two-week high against its US counterpart on Friday following dismal US labor market data that raised fresh doubts the US economy was ready for an interest rate hike this year.

Hiring outside of farming climbed by 142,000 in September, well below the 203,000 economists polled by Reuters had predicted. August figures, already below forecast, were revised sharply lower.

The disappointing numbers sent the greenback down sharply, hitting a two-week low, against a basket of key currencies including the loonie.

Federal Reserve officials have been signaling that they planned to hike interest rates for the first time in nearly a decade by the end of the year, but Friday’s soft employment numbers could fuel concerns that the US economy may be dragged by a China-led global economic slowdown.

At 9:25 a.m. EDT (1325 GMT), the Canadian dollar was trading at C$ 1.3245 to the greenback, or 75.50 US cents, firmer than the Bank of Canada’s official close of C$ 1.3255, or 75.44 US cents.

The loonie hit C$ 1.3184 after the US data, its strongest level in two weeks. It’s weakest level of the session was C$ 1.3270.

US jobs data sent equities and oil prices lower.

Canadian jobs data for September will be released next Friday. August trade data and Ivey PMI figures for Canada are due next Tuesday.

Canadian government bonds were underperforming US Treasuries, with the Canada-US two-year bond spread narrowing to 8.40 basis points and the 10-year spread narrowing to 58.8 basis points.

Canadian government bond prices were mostly higher across the maturity curve, with the two-year price up 11 Canadian cents to yield 0.474 percent and the benchmark 10-year rising 71 Canadian cents to yield 1.351 percent.

Copyright Reuters, 2015

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