CANADA FX DEBT-C$ drops after Canadian jobs disappointment
* Canadian dollar at C$1.0896 or 91.78 U.S. cents * Bond prices higher across the maturity curve (Adds details on market activity, analyst quote, updates prices) By Leah Schnurr TORONTO, May 9 (Reuters) - The Canadian dollar weakened sharply against the greenback on Friday, pulling back from a four-month high after data showed the domestic economy unexpectedly shed jobs last month. Canada lost 28,900 jobs in April versus expectations for a gain of 12,000, and suggesting the labor market is stalled. The unemployment rate held steady at 6.9 percent. Analysts noted how volatile the report tends to be, however. The loonie had risen strongly earlier in the week, and heading into the report analysts had seen it as being vulnerable if the jobs data disappointed the market. "We had all the Canadian-dollar shorts cleaned out of the market earlier in the week," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. "I do think the market is now getting set back up to a 'buy the U.S. dollar on the dips' mentality." That could take the loonie back to a trading range of C$1.0850 to C$1.1150, Anderson said. The Canadian dollar ended the North American session at C$1.0896 to the greenback, or 91.78 U.S. cents, weaker than Thursday's close of C$1.0823, or 92.40 U.S. cents. The loonie hit a session low of C$1.0916. Thursday's gains had taken the currency to its highest level since early January. Broad strength in the U.S. dollar also put pressure on the loonie. The greenback was up 0.6 percent against a basket of currencies. "This is just going to push us back into a bigger range now that we're trading back above that C$1.0858 level," said David Bradley, director of foreign exchange trading at Scotiabank in Toronto. "There's probably more room for U.S. dollar-Canadian dollar to trade a little bit higher in the near term." Overnight, data out of China showed consumer prices posted the smallest rise in 18 months in April, boosting market expectations the country will ease monetary policy. The loonie can be sensitive to economic developments in China, which is a major consumer of natural resources, but the Canadian job report took precedence on Friday. Canadian government bond prices were higher across the maturity curve, with the two-year up 3 Canadian cents to yield 1.059 percent, and the benchmark 10-year up 10 Canadian cents to yield 2.362 percent. (Additional reporting by Allison Martell; Editing by Peter Galloway)
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