* C$ edges higher to 97.44 U.S. cents
* Bonds flat to lower after firm Chinese, U.S. data
By Jennifer Kwan
TORONTO, Oct 1 (Reuters) - Canada's dollar climbed against the U.S. currency on Friday morning, supported by a broadly weaker greenback and gains in commodity and equity prices after firm U.S. and Chinese data.
Jack Spitz, managing director of foreign exchange at National Bank Financial, said the key factor keeping the Canadian currency afloat was a weaker U.S. dollar, which aided oil and gold prices higher. [O/R] [GOL/]
"Firmer commodities, widespread selling of the U.S. dollar continue to keep dollar/Canada offered," he said.
At 9:10 a.m. (1310 GMT), the Canadian dollar CAD=D4 was at C$1.0263 to the U.S. dollar, or 97.44 U.S. cents, up from Thursday's finished at C$1.0290 to the U.S. dollar, or 97.18 U.S. cents.
The greenback accelerated losses against the euro on Friday after New York Federal Reserve Bank President William Dudley said more Fed action is warranted unless the U.S. economic outlook improves. [FRX/] [ID:nN30290786] For Dudley's comments, see [ID:nNLL1LE6II].
However, Spitz noted the Canadian currency is largely underperforming against major crosses on lowered market expectations the Bank of Canada will hike rates in October.
Markets are pricing in an 89 percent probability the bank will hold rates steady on Oct. 19, based on a Reuters calculation using overnight index swaps.BOCWATCH
That sentiment was bolstered by Bank of Canada Governor Mark Carney, who said on Thursday record high household-debt levels and a soft U.S. export market mean modest economic growth for Canada in the months ahead, suggesting further interest rate hikes will likely be delayed. [ID:nN30286204]
"Canada's underperformance can be attributed to the cautious approach now being taken by the central banker which is now pricing in little to no chance of a bank hike on October 19," said Spitz.
Spitz said the currency would look to the performance of North American equity markets for further direction throughout the day.
Toronto's resource-heavy main stock index rose on Friday as stronger-than-expected Chinese manufacturing data eased concerns about the global recovery, lighting a fire under commodity prices. [.TO]
Canadian government bond prices were flat to lower, mirroring moves in U.S. Treasuries, where debt futures dipped on the back of the Chinese data and better-than-expected U.S. numbers. [US/]
The two-year bond CA2YT=RR ticked 2 Canadian cents lower to yield 1.379 percent, while the 10-year bond CA10YT=RR sank 35 Canadian cents to yield 2.798 percent. (Editing by Jeffrey Hodgson)