CANADA FX DEBT-C$ weakens after disappointing jobs report
* Canadian dollar at C$1.0885, or 91.87 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Sept 5 (Reuters) - The Canadian dollar weakened against the greenback on Friday after data showed the domestic economy unexpectedly shed jobs last month, adding to evidence of sluggish employment in Canada. The pressure on the loonie was mitigated by a separate report that showed jobs growth south of the border was weaker than expected, which put broad pressure on the U.S. dollar. But Canada fared worse, dropping 11,000 jobs in August and thwarting economists' forecasts for a gain of 10,000. The loonie's reaction was initially choppy before ultimately pulling lower. "On its own, the Canadian data would probably weigh on the Canadian dollar, but this report is coinciding with the U.S. numbers that were weaker than expected as well," said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. "However, the actual decline here in Canada may tip the scale in terms of a factor that puts downward pressure on the Canadian dollar." The Canadian dollar was at C$1.0885 to the greenback, or 91.87 U.S. cents, weaker than Thursday's close of C$1.0874, or 91.96 U.S. cents. Economists have been optimistic that an acceleration in the U.S. economic recovery would ultimately bode well for Canada, whose largest trading partner is the United States. A slowdown in jobs growth south of the border also hurts Canada's prospects in the long run. "The Canadian economy needs a stronger U.S. economy at this point, so the U.S. jobs report is bad news for the Canadian dollar, too," said Doug Porter, chief economist at BMO Capital Markets in Toronto. Canadian government bond prices were higher across the maturity curve, with the two-year up 3 Canadian cents to yield 1.110 percent and the benchmark 10-year up 39 Canadian cents to yield 2.080 percent. (Additional reporting by Solarina Ho)
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