Canada's dollar slipped to a its lowest in nearly two weeks against the US dollar, while bonds added to gains on Friday morning after data showed job creation slowed more than expected in February. The data firmed expectations that the Bank of Canada has room to breathe before it next raises interest rates.
The Canadian dollar was already weakening ahead of the country's jobs data after a massive earthquake hit Japan, darkening an already bleak mood caused by weak economic data and unrest in Saudi Arabia. The Canadian dollar fell as low as C$0.9791 to the US dollar, or $1.0213, its lowest since February 28, following data that showed Canada's economy added 15,100 jobs in February. The unemployment rate was unchanged at 7.8 percent in February.
Overnight index swaps, which trade based on expectations for the central bank rate, showed investors see a 99.12 percent probability rates will stay on hold April 12, compared with 91.91 percent before the data. The September rate-setting meeting continued to imply the first fully priced-in increase in interest rates. The central bank has left its key rate unchanged at a still-low 1 percent since September after three consecutive rate increases last year.
Risk sentiment will be further tested by a pair of US reports this morning, retail sales for February and the Thomson Reuters/University of Michigan consumer confidence survey for March. By 8:05 am (1305 GMT), the Canadian dollar had pared losses to C$0.9780 to the US dollar, or $1.0225, down from Thursday's North American session close at C$0.9756 to the US dollar, or $1.0250. The rate-sensitive two-year Canadian government bond rose 7 Canadian cents to yield 1.739 percent, while the 10-year bond advanced 7 Canadian cents to yield.
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