CANADA FX DEBT--C$ firms on U.S. jobs data, eye on Bank of Canada

* C$ at C$1.0296 vs US$, or 97.13 U.S. cents
    * Canadian retail sales rise 0.2 pct in Aug
    * U.S. adds 148,000 jobs in Sept, below expectations of
    * Bond prices higher across maturity curve

    By Leah Schnurr
    TORONTO, Oct 22 (Reuters) - The Canadian dollar strengthened
modestly against the greenback in volatile Tuesday morning trade
as the U.S. currency dropped after a weaker-than-expected jobs
report south of the border.
    Domestically, separate data showed Canadian retail sales
edged up in August, though the rise was slightly below
economists' expectations. 
    Analysts said the U.S. jobs report garnered more attention
in the market. The release, which had been delayed by the U.S.
government shutdown, showed the economy added 148,000 jobs last
month, suggesting a loss of momentum in the economy.
    The figures underscored economists' view that the Federal
Reserve may maintain the current pace of its economic stimulus
efforts for longer than had been expected. 
    "It highlights that even leading into the government
shutdown, the employment sector in the U.S. was slowing," said
Camilla Sutton, chief currency strategist at Scotiabank in
    That pushes out when the Fed could start to wind down its
$85 billion a month in bond purchases "well into 2014," said
    The Canadian dollar was at C$1.0296 versus the
greenback, or 97.13 U.S. cents, stronger than Monday's close of
C$1.0301, or 97.08 U.S. cents. The loonie hit a session high of
C$1.0282 shortly after the data was released.
    The greenback was down 0.3 percent against a basket of
    Canadian retail sales rose 0.2 percent in August, though
sales excluding motor vehicles and parts dealers beat forecasts
to rise 0.4 percent.
    Investors also had their attention on an interest rate
decision from the Bank of Canada, due on Wednesday. The central
bank is expected to keep rates steady at 1 percent. 
    The accompanying statement will be a bigger focal point,
with investors sensitive to any change in tone that might
indicate when the Bank will eventually raise rates. Analysts
said the Bank of Canada could also lower its outlook for growth
in its Monetary Policy Report. 
    Government bond prices were higher across the maturity curve
with the two-year bond up 4.8 Canadian cents to yield
1.176 percent and the benchmark 10-year bond up 40
Canadian cents to yield 2.504 percent.