CANADA FX DEBT-C$ firms as investors book greenback profits
* Canadian dollar at C$1.1134 or 89.81 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, Oct 2 (Reuters) - The Canadian dollar firmed against the greenback on Thursday, recovering some of its recent losses, but analysts expect the move to be short-lived with the currency likely to see further declines. Several factors have been pulling the loonie lower but the major driver has been the U.S. dollar's ongoing strength as the U.S. economy picks up and the Federal Reserve moves closer to raising interest rates. Movements in the greenback continued to steer the Canadian dollar on Thursday with a U.S. dollar retreat giving the loonie some breathing room. Investors were taking profits in the greenback as they watched the head of the European Central Bank give a press conference and ahead of Friday's U.S. jobs report, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. "With the runup we've seen in the U.S. dollar, it's key to see a bit of the froth come off the top and that's been driving the crosses, so we're seeing the loonie getting a bit of strength." The Canadian dollar was at C$1.1134 to the greenback, or 89.81 U.S. cents, stronger than Wednesday's close of C$1.1172, or 89.51 U.S. cents. The loonie climbed to a session high of C$1.1071 in the overnight session, its firmest level in a week. After weakening earlier, the euro firmed against the Canadian dollar as the ECB's Mario Draghi outlined the central bank's plans to buy secured debt. Smith said the Canadian dollar is likely to resume its downward path as soon as the U.S. dollar picks up momentum again, but that much of the near-term action will depend on how the U.S. jobs report and Canadian export data look on Friday. The currency pairing could break sustainably through C$1.12 if the jobs data comes in strong following a disappointing August figure, and if the Canadian data is soft, Smith said. "The risk with tomorrow is potentially another weak jobs report out of the U.S. and we may not have the steam to make another run at C$1.12." Canadian government bond prices were mostly lower across the maturity curve, though the two-year was up half a Canadian cent to yield 1.113 percent, while the benchmark 10-year was down 10 Canadian cents to yield 2.082 percent. (Editing by Peter Galloway)
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