CANADA FX DEBT-C$ firms as greenback tide wanes a bit
* Canadian dollar at C$1.1163 or 89.58 U.S. cents * Bond prices lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Oct 2 (Reuters) - The Canadian dollar firmed against the greenback on Thursday, recovering some of its recent losses, but analysts expect the move to be short-lived with the currency likely to see further declines. Several factors have been pulling the loonie lower but the major driver has been the U.S. dollar's ongoing strength as the U.S. economy picks up speed and the Federal Reserve is seen as moving closer to raising interest rates. Movements in the greenback continued to steer the Canadian dollar on Thursday with a U.S. dollar retreat giving the loonie some breathing room. "There seems to be a general sentiment in the market that the economic data of late hasn't really been as good as everyone had expected. The market could be somewhat adjusting their expectations for when the Fed begins normalizing," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets in Toronto. "The Canadian dollar is at the mercy of what's happening to the U.S. dollar right now. Certainly, any sort of strength we do get in the loonie, it looks like people are adding to their hedges and bidding the U.S. dollar back up against it," he said. The Canadian dollar ended the North American session at C$1.1163 to the greenback, or 89.58 U.S. cents, stronger than Wednesday's close of C$1.1172, or 89.51 U.S. cents. The loonie climbed to a session high of C$1.1071 in the overnight session, its firmest level in a week. The euro strengthened against the Canadian dollar after the head of the European Central Bank gave no indication of an imminent stimulus program through the purchase of sovereign bonds. The Canadian dollar is likely to resume its downward path as soon as the U.S. dollar picks up momentum again, but much of the near-term action will depend on how the U.S. jobs report and Canadian export data look on Friday, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. The currency pairing could break sustainably through C$1.12 if the jobs data comes in strong following a disappointing August figure, and if the Canadian data is soft, Smith said. "The risk with tomorrow is potentially another weak jobs report out of the U.S. and we may not have the steam to make another run at C$1.12." Canadian government bond prices were lower across the maturity curve, with the two-year down 1 Canadian cent to yield 1.120 percent, and the benchmark 10-year down 22 Canadian cents to yield 2.095 percent. (Editing by Peter Galloway)
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