* C$ stages rally after dipping below 80 U.S. cents
* Greater appetite for risk fuels latest C$ gains
* Bond prices mixed ahead of Friday’s key jobs data (Adds details)
By Frank Pingue
TORONTO, Feb 3 (Reuters) - Canada’s dollar rose against the U.S. greenback on Tuesday, moving off a one-week low seen overnight, as early gains in stocks and unexpectedly strong U.S. housing data fueled an appetite for riskier assets.
But the rise did not cause much excitement as traders said they expect erratic moves ahead of key jobs reports due from Canada and the United States on Friday, which are both expected to show the economies continued to shed jobs in January.
“It’s really just an across the board selloff in the U.S. dollar that seems to be taking on some early momentum,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada.
“But I think this market is subject to relatively choppy and whippy price fluctuations and the move down below (C$1.24) doesn’t really negate the risk aversion tone that’s likely to be the dominant bias between now and the labor numbers.”
At 10:15 a.m. (1515 GMT), Canada’s dollar was at C$1.2366 to the U.S. dollar, or 80.87 U.S. cents, up from Monday’s close of C$1.2436 to the U.S. dollar, or 80.41 U.S. cents,
Moments earlier, the currency rose to C$1.2359 to the U.S. dollar, or 80.91 U.S. cents, which was 1.3 percent above its overnight low of C$1.2522 to the U.S. dollar, or 79.86 U.S. cents, its weakest level since Jan. 23.
The currency’s skid below 80 U.S. cents overnight was blamed party on investors who opted to avoid on risk until catching a glimpse of the jobs data.
But early gains in stocks futures fueled some appetite for risk. And the U.S. dollar extended losses against other currencies after a report showed U.S. pending sales of existing homes unexpectedly rose in December. [ID:nWEQ000632]
Friday’s Canadian January jobs data is expected to show the economy shed 40,000 jobs after losing 34,400 in December. That would provide further evidence that Canada’s economy is in recession and may trigger another selloff in the currency.
Hesitation ahead of that data will likely keep the Canadian dollar from posting any significant rallies, analysts said.
“Investors are going to remain on the sidelines until they get some confirmation of what the data says and so that bodes poorly for the Canadian dollar,” said Charmaine Buskas, senior economics strategist at TD Securities.
Helping to support the Canadian dollar was a rise in prices for oil, a key Canadian economy, back above $40 a barrel as investors felt supply cuts by OPEC may finally be building a floor under crude prices.
Canadian bond prices were mixed, getting a slight boost on the short end of the curve as the jobs data due out later this week are likely to support calls for the Bank of Canada to cut rates below the current 50-year low.
The domestic jobs report will arrive 90 minutes ahead of a U.S. report that is expected to show the economy shed 525,000 jobs in January.
“All the (data) highlights are at the end of the week with employment releases in both countries,” said Sal Guatieri, senior economist at BMO Capital Markets.
Bond prices have been under pressure in recent session on concerns about supply in both Canada and the United States even though most data is coming in worse than expected.
Other Canadian data due this week include building permits for December and January’s Ivey Purchasing Managers Index, both due on Thursday.
The two-year bond was up 4 Canadian cents at C$102.59 to yield 1.307 percent, while the 10-year bond dropped 13 Canadian cents to C$110.05 to yield 3.005 percent.
The 30-year bond was down 40 Canadian cents at C$122.50 to yield 3.710 percent. In the United States, the 30-year treasury yielded 3.549 percent. (Editing by Jeffrey Hodgson)