CANADA FX DEBT-C$ hits 2-week high on rosy U.S., Canada jobs data

* C$ strengthens to C$0.9746, or $1.0261
    * Canadian currency at its strongest since Sept. 21
    * Bank of Canada's hawkish tone remaining tenable

    By Alastair Sharp
    TORONTO, Oct 5 (Reuters) - Canada's dollar climbed to a
two-week high against its U.S. counterpart on Friday after jobs
data showed the North American labor market had improved in
    The U.S. unemployment rate dropped to a near four-year low
of 7.8 percent in September, while Canada added a thumping
52,100 jobs, almost all of them full-time, defying expectations
and bolstering the Bank of Canada's case for an eventual
interest rate rise.  
    "I think the key point here is the economy is still churning
out jobs at a healthy pace," said Doug Porter, deputy chief
economist at BMO Capital Markets. "I think the combination of
figures is unambiguously positive for the Canadian dollar."  
    The Canadian dollar jumped sharply against the U.S.
dollar, which itself gained against the Japanese yen.
    By 9:45 a.m. (1345 GMT) the Canadian currency was trading at
C$0.9746 to the greenback, or $1.0261, compared to C$0.9810, or
C$1.0194, just before the data was released. At one point it hit
C$0.9735, its strongest level since Sept. 21.
    "Certainly, it dispels some of the concern through the
second quarter where we were getting some indication of maybe a
stalling in job growth; these last two months have put to rest
those concerns," said Paul Ferley, Royal Bank of Canada's
assistant chief economist.
    Canadian government bond prices fell, with the two-year bond
 slipping 13 Canadian cents to yield 1.153 percent,
while the benchmark 10-year bond fell by 50 Canadian
cents, to yield 1.816 percent.
    The slip in the price of government debt showed a move out
of perceived safe-haven assets, as well as an assumption that
the Bank of Canada has more leverage to potentially raise
interest rates, an intention it repeated Thursday.
    "This positive Canadian jobs data will definitely put
pressure on the Bank of Canada to raise rates sooner rather than
later and maintain its hawkish tone towards raising rates,"
Rahim Madhavji from Knightsbridge Foreign Exchange wrote in a
note to clients.