CANADA FX DEBT-C$ sags as US$ gains; jobs data eyed
* C$ ends at 98.18 U.S. cents
* Charge toward U.S. dollar parity stalls
* Investors await Canada, U.S. jobs data
* Bond prices mixed (Updates with closing figures, adds quotes)
By Jennifer Kwan
TORONTO, Oct 7 (Reuters) - The Canadian dollar retreated from its recent charge toward parity with the U.S. dollar on Thursday as the greenback rebounded, while commodity and stock prices weakened ahead of key employment data due on Friday.
The U.S. dollar regained some footing after slipping to a 15-year low versus the yen. And, as traders bet momentum had swung too far, too fast, commodity prices pulled away from gains that had pushed gold to record highs. [MKTS/GLOB]
The U.S dollar had been battered in recent sessions on growing prospects the the Federal Reserve will expand its purchases of bonds in an effort to keep interest rates low and stimulate a struggling U.S. economy.
The Canadian dollar hit a five-month high against the greenback on Wednesday.
"The story today isn't necessarily about Canadian dollar weakness, it's more just U.S. dollar strength," said David Tulk, senior macro strategist at TD Securities.
"I think we saw a pretty sizable run forward in the Canadian dollar the last couple of days so it just seems some fatigue has set in and investors are re-evaluating their positions ahead of tomorrow's payrolls report and Canada's jobs numbers."
U.S. nonfarm payrolls for September are expected to be little changed [ID:nN05187700], while Canada is seen adding 10,000 jobs. [ID:nN01221816]
"Many people have expected that the labor market is this key indicator for the Fed to consider quantitative easing," said Tulk, referring to the U.S. jobs report.
"In terms of the market's reaction, they will hop all over the prospect of a weak data point to suggest that quantitative easing is imminent. You would see a rally in Treasuries and probably a rally in equities."
The Canadian dollar CAD=D4 finished at C$1.0185 to the U.S. dollar, or 98.18 U.S. cents, down from Wednesday's finish of C$1.0107 to the U.S. dollar, or 98.94 U.S. cents.
Oil, a key Canadian export, fell below $82 a barrel and gold sank from a record high above $1,364 an ounce. [O/R] [GOL/]
On Wednesday, the Canadian dollar rose as high as C$1.0063 to the U.S. dollar, or 99.37 U.S. cents, its highest level since April 30.
Given the power of the recent U.S. dollar selloff, it is reasonable to expect a pause, said David Watt, senior currency strategist at RBC Capital Markets. He added that investors may also be cautious ahead of the imminent start of earnings season, and ahead of the employment reports.
Canadian bond prices were in line with U.S. Treasuries, where the short end gained on anxiety about the upcoming jobs data and on expectations that the U.S. Federal Reserve will take steps to make credit easier. [US/]
"I think it's a quiet day in bond land. There's a certain amount of positioning ahead of tomorrow's numbers. The bigger story is what will happen tomorrow," said TD's Tulk.
The two-year bond CA2YT=RR rose 4 Canadian cents to yield 1.333 percent, while the 10-year bond CA10YT=RR edged 2 Canadian cents lower to yield 2.753 percent. (Reporting by Jennifer Kwan; editing by Rob Wilson)
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