CANADA FX DEBT-C$ ends firmer, touches 2-wk high on strong jobs

* C$ ends at C$0.9789, or $1.0216
    * Canadian currency hits strongest level since Sept. 21
    * Data reinforces Bank of Canada's hawkish tone

    By Andrea Hopkins
    TORONTO, Oct 5 (Reuters) - Canada's dollar ended firmer
against its U.S. counterpart on Friday after touching a two-week
high, boosted by much stronger-than-expected Canadian jobs data
and a surprise drop in the U.S. unemployment rate.
    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.  
    "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. "The combination of figures is
unambiguously positive for the Canadian dollar."
    The Canadian dollar ended the day at C$0.9789 to
the greenback, or $1.0216, not far from its North American close
on Thursday at C$0.9805, or C$1.0199. At one point it hit
C$0.9735, its strongest level since Sept. 21.
    A number of factors limited the currency's gains, including
some skepticism that the Canadian economy is as robust as the
employment numbers suggest, as well as weakening commodity
markets, said Shaun Osborne, chief currency strategist at TD
    "With commodity prices pulling back here, I think it's going
to be a struggle for the Canadian dollar to do significantly
better than highs we saw just a few weeks ago," he said.
    "I'm a little skeptical that given what appears to be a
fairly slow growth environment in the U.S. that Canada can
continue to generate these rather stellar job numbers moving
forward," Osborne added.
    With investors shifting into riskier assets, Canadian
government bond prices fell. The two-year bond 
slipped 9.5 Canadian cents to yield 1.138 percent, while the
benchmark 10-year bond fell by 42 Canadian cents, to
yield 1.807 percent.
    Bond prices also fell as the data fueled expectations the
Bank of Canada was more likely to tighten policy next year. A
top official with the central bank reiterated the central bank's
rate hike bias on Thursday. 
    Overnight index swaps, which trade based on expectations for
the central bank's key policy rate, showed that traders
increased bets on a rate hike in 2013 after the job reports.
    "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.