4 Min Read
* C$ turns higher after U.S. data hits greenback
* Canada loses 6,600 jobs in Sept, details soothe
* Bond prices mostly up after poor reading on U.S. jobs (Updates with closing figures, adds quotes)
By Cameron French
TORONTO, Oct 8 (Reuters) - The Canadian dollar rallied versus the U.S. dollar on Friday as disappointing U.S. jobs data prompted traders to look past reports showing weakness in Canada's housing and labor markets.
The Canadian dollar initially dipped on a report showing the country's economy unexpectedly shed 6,600 jobs in September, but the currency turned around as investors digested a report that U.S. employers cut 95,000 jobs during the month.
The U.S. losses, which compared with expectations that payrolls would remain unchanged, spurred speculation that the U.S. Federal Reserve would turn to quantitative easing to stimulate the economy, which would further reduce the yield on U.S. debt.
"The overriding theme is selling U.S. dollars across the board," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The Canadian dollar CAD=D4 finished at C$1.0113 to the U.S. dollar, or 98.88 U.S. cents, gaining in the final hours of trading as volumes dried up ahead of the Canadian Thanksgiving long weekend.
The closing level was up from Thursday's close of C$1.0185 to the U.S. dollar, or 98.18 U.S. cents.
Higher prices for commodities such as oil, copper, and gold -- all of which Canada exports -- also helped spur the currency, bringing it in range of reaching parity with the U.S. greenback.
For the week, the currency rose 0.8 percent, its sixth-straight week of gains, helped by recovering commodity prices, expectations of rising interest rates, and the U.S. greenback's weakness.
Spitz said the trend to a stronger currency should continue, with C$1.0063 to the U.S. dollar looming as a key technical level, meaning a breach could propel the Canadian dollar up sharply.
"Parity continues to be a target for most people that are long Canada," he said.
CANADIAN ECONOMY SLOWING
Economists said the details in the Canadian jobs report were not as soft as the overall loss of jobs would suggest, but the data was still sufficient to keep views steady that the Bank of Canada will refrain from raising interest rates later this month.
The unemployment rate actually edged down to 8.0 percent in September from 8.1 percent in August, while full-time jobs rose. Wage growth was also up in the month.
"Overall this report is not disastrous. Certainly it supports the growing market participants' view out there that the Bank of Canada will take a pause (from raising rates) on Oct. 19," said Sebastien Lavoie, assistant chief economist at Laurentian Bank Securities.
Data on Friday also showed Canadian housing starts fell 1.5 percent in September, marking the fourth monthly decline in the five months. Separately, however, two Bank of Canada surveys showed businesses were positive about future sales, investment and hiring, but expect economic growth to be modest. [ID:nN08225464]
Canadian government bond prices were mostly higher after the U.S. nonfarm payrolls report. [ID:nN08205203]
The two-year bond CA2YT=RR ended down 2 Canadian cents to yield 1.344 percent, while the 10-year bond CA10YT=RR advanced 50 Canadian cents to yield 2.693 percent. (Reporting by Cameron French, additional reporting by Ka Yan Ng; editing by Peter Galloway)