CANADA FX DEBT-C$ edges higher ahead of Friday's key jobs data
* C$ rises slightly to C$1.1033 per US$
* Traders await Friday's key jobs data
* Bond prices finish lower across curve (Recasts)
By Frank Pingue
TORONTO, Sept 3 (Reuters) - Canada's currency rose slightly against the greenback on Thursday, boosted by stronger equities, but investors largely avoided big bets ahead of key domestic and U.S. jobs data that will give a glimpse into the health of the two economies.
If the reports out Friday show more jobs were shed than expected, traders could unload the Canadian dollar and flock to the U.S. dollar given its status as a safe haven play. But a strong reading could boost the Canadian currency.
"It's just a matter of traders just kind of sitting on their hands waiting on the numbers for tomorrow," said Brendan McGrath, senior FX trader at Custom House, a currency services firm in British Columbia. "But we should see the U.S. dollar catch a bid tomorrow if the U.S. and Canadian employment data is worse than expected."
According to McGrath, negative surprises in the data could knock the Canadian dollar back down toward the two-week low of C$1.1103 that it hit Wednesday. And he said a significant break above C$1.11 would put the next resistance level for the dollar around C$1.13.
The Canadian dollar closed at C$1.1033 to the U.S. dollar, or 90.64 U.S. cents, up from C$1.1048 to the U.S. dollar, or 90.51 U.S. cents, at Wednesday's close.
The currency received support from equity markets. The S&P/TSX composite index .GSPTSE ended up 2.06 percent at 10,921.49, while the Dow Jones industrial average .DJI rose 0.69 percent to 9,344.61.
The Canadian economy is expected to have shed 10,000 jobs in August, a smaller decline than July, while the unemployment rate is seen rising. [ID:nN02544477]
The Canadian numbers will be released just before the U.S. nonfarm payrolls report, which is expected to show employers in August likely cut jobs by the least amount in a year, a sign of healing in the labor market. [ID:nN01485399]
Activity during the second half of Friday's session could reach a standstill as many traders may leave early for a head start on the long weekend.
Financial markets in Canada and the U.S. will be closed on Monday for Labor Day, which generally leads to lower liquidity and exaggerated swings.
BOND PRICES TILT LOWER
Canadian bond prices ended slightly weaker as hints of stock market stability lessened the demand for more secure assets like government debt and ate away at a position of recent gains.
The slip in prices mirrored a similar move in the bigger U.S. Treasury market as data there on the service sector and weekly jobless claims offered further suggestion that a modest economic recovery was under way. [ID:nN0391201]
The two-year bond CA2YT=RR dipped 4 Canadian cents to C$99.50 to yield 1.259 percent, while the 10-year bond CA10YT=RR shed 13 Canadian cents to C$103.32 to yield 3.346 percent.
The 30-year bond CA30YT=RR slipped 30 Canadian cents to C$118.95 to yield 3.878 percent.
Canadian bonds outperformed their U.S. counterparts across much of the curve. The Canadian 30-year bond yield was about 28.7 basis points below its U.S. counterpart, compared with 26.1 basis points on Wednesday. (Editing by Jeffrey Hodgson)
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