CANADA FX DEBT-C$ hits one-week low on dismal U.S. jobs data

Fri Sep 2, 2011 4:45pm EDT
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* C$ ends at C$0.9842 vs US$, or $1.0161

* U.S. payrolls flat in August, well below expectations

* Dovish tone expected from Bank of Canada next week

* Bonds push higher across curve; yields near August lows (Updates with close, adds comment on BoC policy)

By Andrea Hopkins

TORONTO, Sept 2 (Reuters) - The Canadian dollar hit a one-week low on Friday after the U.S. jobs report for August came in far weaker than expected, reigniting fears about a global growth slowdown and sending investors to safe-haven assets.

The U.S. dollar also weakened against key currencies such as the yen and Swiss franc [FRX] after news that U.S. employers hired no new workers last month, against expectations for a 75,000 increase in payrolls. That sent government bond prices higher and pushed stock markets into a global slump. [MKTS/GLOB]

Canada's dollar fell against all major currencies on concern about the country's link to the U.S. economy. The United States is by far Canada's largest trading partner.

The grim employment news will likely keep pressure on the U.S. Federal Reserve to provide more monetary stimulus to aid the economy. The knock-on effect of that means the Bank of Canada will also likely keep rates lower for longer.   Continued...