CANADA FX DEBT-C$ firms by most in 5 weeks as exports jump, oil rallies

(Adds analyst quotes, updates prices)
    * Canadian dollar ends at C$1.2990, or 76.98 U.S. cents
    * Loonie touches its strongest since Monday at C$1.2983
    * Bond prices lower across steeper maturity curve

    By Fergal Smith
    TORONTO, Sept 2 (Reuters) - The Canadian dollar strengthened
by the most in five weeks against its U.S. counterpart on Friday
as domestic data showed a jump in exports and oil rose.
    Canada's trade deficit in July unexpectedly shrank to C$2.49
billion from a record C$3.97 billion in June as exports jumped
by 3.4 percent and imports stagnated. 
    "This is definitely a breath of fresh air for Canadian
trade," said Doug Porter, chief economist at BMO Capital
Markets, who noted strength in export volumes and in non-energy
    The Bank of Canada has been counting on an uptick in
non-energy exports for the economy to meet its growth
projections. However, non-energy exports have been hampered this
year by weak U.S. business investment, while a weaker Canadian
dollar has not helped exports as much as expected. 
    The central bank is likely "to play the wait-and-see game"
at next week's interest rate decision as exports show signs of
life and the U.S. economy picks up, said Adam Button, currency
analyst at ForexLive.
    A lack of momentum in Canada's economy has prompted analysts
to push their expectations for a rate hike further back to 2018,
a Reuters poll found. 
    The Canadian dollar closed at C$1.2990 to the
greenback, or 76.98 U.S. cents, stronger than Thursday's close
of C$1.3086, or 76.42 U.S. cents.
    The currency's weakest level of the session was C$1.3114,
while it touched its strongest since Monday at C$1.2983.
    For the week, the loonie rose just 0.1 percent.
    U.S. crude prices settled up $1.28 at $44.44 a barrel
as a report showing weaker U.S. jobs growth initially hurt the
    U.S. employment growth slowed more than expected in August.
The data could effectively rule out a rate increase from the
Federal Reserve this month. 
    Speculators raised bullish bets on the Canadian dollar for
the second straight week, Commodity Futures Trading Commission
data showed. Net long Canadian dollar positions rose to 22,400
contracts in the week ended Aug. 30 from 16,734 contracts in the
prior week.
    Canadian government bond prices were lower across a steeper
maturity curve, with the two-year bond down 5.5
Canadian cents to yield 0.593 percent and the benchmark 10-year
 falling 55 Canadian cents to yield 1.063 percent.
    The Canada-U.S. two-year bond spread narrowed 2.6 basis to
-20.1 basis points, while the 10-year spread was 2.7 basis
points narrower at -53.8 basis points as Canadian government
bonds underperformed.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
James Dalgleish)