CANADA FX DEBT-C$ falls, risk sentiment turns on data, Japan
* C$ falls to lowest since Feb. 28
* Short-dated bond prices extend gains
* Canada adds 15,100 jobs vs forecast of 21,000 gain
* Unemployment rate steady at 7.8 percent
* Japan earthquake, Middle East, data drags on sentiment (Adds details)
By Ka Yan Ng
TORONTO, March 11 (Reuters) - Canada's dollar slipped to a its lowest in nearly two weeks against the U.S. dollar, while bonds added to gains on Friday morning after data showed job creation slowed more than expected in February.
The data firmed expectations that the Bank of Canada has room to breathe before it next raises interest rates.
The Canadian dollar was already weakening ahead of the country's jobs data after a massive earthquake hit Japan, darkening an already bleak mood caused by weak economic data and unrest in Saudi Arabia. [MKTS/GLOB]
The Canadian dollar CAD=D4 fell as low as C$0.9791 to the U.S. dollar, or $1.0213, its lowest since Feb. 28, following data that showed Canada's economy added 15,100 jobs in February. The unemployment rate was unchanged at 7.8 percent in February.
Analysts surveyed by Reuters had expected the economy to add 21,000 jobs in February and the unemployment rate to dip to 7.7 percent. [ID:nN11228750] ECONCA
"This kind of number certainly gives (the Bank of Canada) additional patience to wait further. At this point our call for September for the first hike appears OK," said Sebastien Lavoie, assistant chief economist at Laurentian Bank Securities.
Overnight index swaps, which trade based on expectations for the central bank rate, showed investors see a 99.12 percent probability rates will stay on hold April 12, compared with 91.91 percent before the data. BOCWATCH
The September rate-setting meeting continued to imply the first fully priced-in increase in interest rates. The central bank has left its key rate unchanged at a still-low 1 percent since September after three consecutive rate increases last year.
Risk sentiment will be further tested by a pair of U.S. reports this morning, retail sales for February and the Thomson Reuters/University of Michigan consumer confidence survey for March. ECONUS
"We're looking here for perhaps a softer outturn for retail sales as well as consumer confidence. That is likely to weigh on investors today and we don't expect this to be a very positive day for risk assets," said David Tulk, chief Canada macro strategist at TD Securities.
By 8:05 a.m. (1305 GMT), the Canadian dollar had pared losses to C$0.9780 to the U.S. dollar, or $1.0225, down from Thursday's North American session close at C$0.9756 to the U.S. dollar, or $1.0250.
The rate-sensitive two-year Canadian government bond CA2YT=RR rose 7 Canadian cents to yield 1.739 percent, while the 10-year bond CA10YT=RR advanced 7 Canadian cents to yield 3.260 percent.
(Reporting by Ka Yan Ng; Editing by Chizu Nomiyama)
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