CANADA FX DEBT-C$ weakens modestly as investors eye jobs report
* Canadian dollar at C$1.0921 or 91.57 U.S. cents * Bond prices higher across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Aug 7 (Reuters) - The Canadian dollar weakened slightly against the greenback on Thursday, pulling back from the previous session's strong gains as investor focus turned to the key domestic labor market report at the end of the week. The day's move was more muted than the currency has seen lately after having lost 1.6 percent in the last two weeks as optimism that the U.S. recovery is picking up speed has sent investors into the greenback, pushing the loonie lower. After Wednesday's rise on the back on better-than-expected trade figures, the loonie was consolidating as investors look to Friday's employment report, said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. "That seems to be the chatter is that everyone is just waiting for tomorrow's jobs numbers to be the next catalyst for the next move in U.S. dollar-Canadian dollar," said Issa. The economy is forecast to have added 20,000 jobs in July after unexpectedly losing jobs the month before. The unemployment rate is seen holding steady at 7.1 percent. Ken Wills, currency strategist and broker at CanadianForex in Toronto, expects to see a figure above consensus at around 28,000. That should see the loonie challenge the C$1.09 area but it is unlikely to get as far as the next level at C$1.0880, he said. "We need a number plus 30,000 or 35,000 I think to really see it break further," said Wills. The Canadian dollar ended the North American session at C$1.0921 to the greenback, or 91.57 U.S. cents, weaker than Wednesday's close of C$1.0913, or 91.63 U.S. cents. The loonie saw little reaction to data earlier in the day that showed the value of building permits issued in June surged, contrary to economists' forecasts for a decline. In the longer run, analysts still expect to see more weakness for the currency. Wills expects that in the next few weeks, the Canadian dollar will be trading around C$1.0950, and watching for a catalyst to challenge the psychologically important C$1.10, which could come from geopolitical concerns. "We're starting to see markets react to that so I think that's likely where that catalyst will come from. I don't see either central bank - Canada or the U.S. - changing their stance in the next few months, so I think it'll probably come from geopolitical." Canadian government bond prices were higher across the maturity curve, with the two-year up 2-1/2 Canadian cent to yield 1.069 percent and the benchmark 10-year up 31 Canadian cents to yield 2.076 percent. (Editing by Grant McCool)
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