CANADA FX DEBT-C$ weakens after softer-than-expected jobs data

* C$ dips to C$1.0112 vs US$, or 98.89 U.S. cents
    * Weakens to lowest level since April 29 as US$ jumps
    * Employment grows 12,500, vs 15,000 expected
    * Canadian bond prices lower

    By Alastair Sharp
    TORONTO, May 10 (Reuters) - The Canadian dollar dropped to
its lowest against the U.S. dollar in almost two weeks on Friday
after Canadian data showed fewer new jobs created than expected
in April, erasing strong gains by the currency earlier in the
    The currency ended the week down just over 0.3 percent.
    The modest jobs gain in April likely had only a negligible
impact on the currency, TD Securities analyst Greg Moore said,
as the U.S. dollar found renewed buying interest across all
major currencies after dollar/yen rallied above 100.
    "Canadian dollar selling was held back (ahead of the
domestic jobs data), but once that number came in generally as
expected the Canadian caught up with the sell-off in all
currencies against the big dollar," Moore said.
    He said TD in recent weeks has turned more bearish on the
loonie, as Canada's currency is colloquially known, as the
domestic economy shows little vigor and on the assumption that
the U.S. Federal Reserve may soon slow or stop its policy of
aggressive monetary easing.
    Friday's slip, coupled with Thursday's decline, wiped out
gains recorded earlier this week when the loonie touched its
strongest levels since mid-February and echoed weakness in the
price of oil and gold.  
    The Canadian economy added 12,500 jobs last month, clawing
back some of the 54,500 jobs lost in March, but the unemployment
rate stayed at 7.2 percent, Statistics Canada reported. A
Reuters survey of economists had forecast 15,000 new jobs.
    "The report on balance was probably slightly softer than
expected, so it's not a big surprise that we saw a bit of a
sell-off (of the Canadian dollar), but it does not change our
bigger view of the Canadian economy and what the Bank of Canada
is going to do," said Robert Kavcic, senior economist at BMO
Capital Markets. 
    "This is pretty consistent with an economy that has been
growing below potential, and we're not looking for any move from
the Bank of Canada until the second half of 2014, so this
wouldn't change any of that."
    The Canadian dollar ended the session trading at
C$1.0112, or 98.89 U.S. cents, well off Thursday's North
American session close at C$1.0075, or 99.26 U.S. cents. At one
point it reached C$1.0152, its lowest level since April 29. 
    The currency had climbed to its strongest level in nearly
three months on Thursday, closing in on parity with the U.S.
dollar after gaining some 2-1/2 cents since late April.
    Over the longer term, the Canadian dollar is expected to
weaken against the greenback in the year ahead, according to a
Reuters poll published on Wednesday. Forecasters cited concern
about the economy's slow rate of growth compared with that of
the United States. 
    In global news, the yen made a decisive break through 100 to
the dollar to hit a 4-1/2-year low on Friday, triggering a rise
in safe-haven bond yields and supporting gains in European and
Japanese shares which hit new five-year highs. 
    U.S. Treasury 10-year note yield hit a one-month peak of
1.85 percent as the dollar gained on the yen, while
Wall Street ended modestly higher after hitting numerous record
highs in recent days. 
    Prices for Canadian government bonds were lower across the
curve. The two-year bond slipped almost 7 Canadian
cents to yield 1.008 percent, while the benchmark 10-year bond
 lost 74 Canadian cents to yield 1.883 percent.