* C$ retreats from C$1.0687 session high
* Oil prices weigh on Canadian dollar
* Bond prices higher ahead of jobs data (Recasts)
By Frank Pingue
TORONTO, Aug 6 (Reuters) - Canada's currency closed lower versus the greenback on Thursday as risk averse traders hedged positions ahead of domestic jobs data on Friday that is expected to show unemployment at an 11-year high.
Canada's currency was also dragged down by oil prices that ended lower after a back-and-forth session that at one point had prices at their highest level since late June. [ID:nSP359441]
"Oil (prices) came back towards the end of the day but the Canadian dollar failed to react to the last recovery in the oil price," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
"So risk aversion ... and position-squaring ahead of tomorrow's data, and that's the reason why the Canadian dollar didn't really react to the last move in the oil price."
Markets expect Statistics Canada to report net job losses of 17,500 for July, and an unemployment rate of 8.8 percent. The data is due at 7:00 a.m. (1100 GMT).
The Canadian dollar closed at C$1.0767 to the U.S. dollar, or 92.88 U.S. cents, down from C$1.0701 to the U.S. dollar, or 93.45 U.S. cents, at Wednesday's close.
The lower close erased gains made early in the session when the latest North American economic data supported a view that the worst of the world recession is over.
While not typically a market mover, the Canadian dollar did rally as high as C$1.0687 to the U.S. dollar, or 93.57 U.S. cents, after data showed Canadian builders unexpectedly took out more permits in June than in May [ID:nN06293340]
The report came at the same time as U.S. data that showed the number of people filing initial claims for jobless benefits fell in the latest week. [ID:nN05350423].
And shortly after that were upbeat comments from European Central Bank President Jean-Claude Trichet, who said he sees a gradual recovery in 2010. [ID:nFAE005213]
BOND PRICES EDGE HIGHER
Canadian bond prices ended higher alongside the bigger U.S. Treasury market, snapping two straight sessions of declines, as dealers were cautious ahead of Friday's jobs figures.
The two-year Canadian bond edged up 3 Canadian cents to C$99.08 to yield 1.458 percent, while the 10-year bond gained 33 Canadian cents to C$101.63 to yield 3.551 percent.
The 30-year bond rose 80 Canadian cents to C$116.25 to yield 4.023 percent. In the United States, the 30-year Treasury yielded 4.546 percent.
Canadian bonds outperformed U.S. Treasuries across the curve. The Canadian 30-year bond was about 52.3 basis points below the U.S. 30-year yield, compared with about 49.5 basis points below on Wednesday. (Editing by Peter Galloway)