CANADA FX DEBT-C$ weakens after disappointing jobs report
* Canadian dollar at C$1.0881, or 91.90 U.S. cents * Bond prices mostly higher across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Sept 5 (Reuters) - The Canadian dollar weakened against the greenback on Friday after data showed the domestic economy unexpectedly shed jobs last month, adding to evidence of a sluggish labor market in Canada. The pressure on the loonie was mitigated by a separate report that showed jobs growth south of the border was weaker than expected, which put broad pressure on the U.S. dollar. But Canada fared worse, with a loss of 11,000 jobs in August, thwarting economists' forecasts for a gain of 10,000. Trading in the loonie was initially choppy before the currency was ultimately pulled lower. "Both jobs reports were pretty dismal but the Canadian report definitely trumped the U.S. report on a relative basis," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "Losing jobs on a month-over-month basis and still having the full-time jobs be sluggish is definitely a negative for the Canadian economy." The Canadian dollar ended the North American session at C$1.0881 to the greenback, or 91.90 U.S. cents, weaker than Thursday's close of C$1.0874, or 91.96 U.S. cents. Economists have been optimistic that an acceleration in the U.S. economic recovery would ultimately bode well for Canada, whose largest trading partner is the United States. A slowdown in U.S. jobs growth also hurts Canada's prospects in the long run. "The Canadian economy needs a stronger U.S. economy at this point, so the U.S. jobs report is bad news for the Canadian dollar, too," said Doug Porter, chief economist at BMO Capital Markets in Toronto. The Canadian dollar was little changed on a week that was characterized by some sizeable moves both up and down. The loonie benefited from a handful of positive factors earlier in the week, including a strong trade number and a less-dovish-than-expected policy statement from the Bank of Canada. "To not be able to follow through in terms of price action and stay in the low C$1.08s or move back into the high C$1.07s, I think it's very telling that the U.S. dollar/Canadian dollar pair is still a buy on the dips," said Smith. "For the most part, the U.S. dollar is going to be driving the bus in terms of where we go," he said. "I think any sort of strength in the loonie will probably be sold as corporate interest takes note." Canadian government bond prices were mostly higher across the maturity curve, with the two-year up 2 Canadian cents to yield 1.115 percent and the benchmark 10-year up 7 Canadian cents to yield 2.116 percent. (Additional reporting by Solarina Ho; Editing by Leslie Adler)
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