CANADA FX DEBT-C$ retreats from 3-week high; rate hike bets dip on jobs data

    * Canadian dollar at C$1.2764, or 78.35 U.S. cents
    * Loonie touches three-week high at C$1.2730
    * Canadian jobs fall 1,100 in April
    * Bond prices higher across steeper yield curve

    By Fergal Smith
    TORONTO, May 11 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday, with the
currency pulling back from an earlier three-week high after
domestic jobs data tempered expectations for a Bank of Canada
interest rate hike this month.
    The decline of 1,100 jobs in April was well short of
economists' forecasts for an increase of 17,400. But full-time
jobs rose by nearly 29,000 and wage growth accelerated.
    "I think it will shave the currency a little bit," said Doug
Porter, chief economist at BMO Capital Markets. "Going into this
report, the market had a strong probability of the Bank of
Canada raising interest rates in May and I think this is going
to cool some of that speculation."
    Chances of a Bank of Canada interest rate hike at the May 30
announcement slipped to 39 percent from nearly 50 percent before
the jobs data, the overnight index swaps market indicated.
    At 9:12 a.m. EDT (1312 GMT), the Canadian dollar         
was trading nearly unchanged at C$1.2764 to the greenback, or
78.35 U.S. cents. The currency touched its strongest since April
20 at C$1.2730.
    The loonie is expected to strengthen over the coming year as
a clearer outlook for the North American Free Trade Agreement
opens the door to more Bank of Canada interest rate hikes, a
Reuters poll of currency strategists showed.                 
    U.S. House Speaker Paul Ryan has set a May 17 deadline to be
notified of a new NAFTA trade deal to give the current Congress
a chance of passing it, while Mexico's top trade official on
Thursday said time was running short to meet such a deadline.
    The price of oil, one of Canada's major exports, steadied
near 3-1/2 year highs as the prospect of new U.S. sanctions on
Iran tightened the outlook for Middle East supply.             
    U.S. crude        prices were down 0.2 percent at $71.19 a
    Canadian government bond prices were higher across a steeper
yield curve, with the two-year            up 5 Canadian cents to
yield 1.951 percent and the 10-year             rising 12
Canadian cents to yield 2.382 percent.
    The 10-year yield had touched its highest intraday since May
2014 at 2.417 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)