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

* C$ at C$1.0289 vs US$, or 97.19 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
against the greenback on Tuesday as a disappointing jobs report
south of the border took the U.S. currency lower, while
investors looked ahead to an upcoming monetary policy
announcement from the Bank of Canada. 
    Domestically, data showed Canadian retail sales edged up in
August, though the rise was slightly below economists'
    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," she
    The Canadian dollar ended the North American
session at C$1.0289 versus the greenback, or 97.19 U.S. cents,
stronger than Monday's close of C$1.0301, or 97.08 U.S. cents. 
    The greenback lost 0.6 percent against a basket of
    Still, the loonie did not gain as much against the U.S.
dollar as some other major currencies. The market was cautious
ahead of Wednesday's interest rate decision from the Bank of
Canada. The central bank is expected to keep rates steady at 1
    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 are also looking for the central bank's view on the
economic outlook for both Canada and the United States. In a
speech earlier this month, Senior Deputy Governor Tiff Macklem
said the central bank expects lower growth in the third quarter
than had been previously forecast.
    "We're not expecting any radical changes tomorrow but
Canada's and the U.S.'s fortunes are so inextricably linked to
one another that the market is placing a lot of emphasis on
their outlook for the U.S. economy and the potential downside
risks," said Gareth Sylvester, director at Klarity FX in San
    Government bond prices were higher across the maturity curve
with the two-year bond up 6.3 Canadian cents to yield
1.168 percent and the benchmark 10-year bond up 57
Canadian cents to yield 2.483 percent.