* Canada jobs gains six times more than expected
* C$ charges to highest level since Sept. 2008
* Bond prices soften after data; lower across the curve
TORONTO, Oct 9 (Reuters) - The Canadian dollar raced to a one-year high on Friday as domestic jobs data that humbled forecasts ignited talk about whether the Bank of Canada will be forced to break its conditional pledge and raise rates sooner than expected.
Canada's currency shot to C$1.0423 to the U.S. dollar, or 95.94 U.S. cents, its highest level since Sept 2008, after data showed Canada's economy created 30,600 jobs in September, six times more than expected. [ID:nN09253705]
Helping to power the latest rally in the domestic currency was talk about whether Canada's central bank may opt to forfeit its conditional pledge to keep rates at their historic low of 0.25 percent at least until the end of June 2010.
Talk of central bank rate hikes ramped up this week after the Reserve Bank of Australia raised its interest rate and became the first central bank in the Group of 20 nations to tighten policy as the financial crisis abates. [ID:nSYD520296]
"The market was looking for a strong report and looking for a reason to buy the Canadian dollar ... and everybody is now wondering if this does bring a Bank of Canada rate hike that much closer," said David Watt, senior currency strategist RBC Capital Markets.
"I still think there are some special circumstances to this report that will leave the Bank of Canada on the sidelines but the market is wanting to run."
Beyond the strong headline figure of the report were less impressive details, Watt suggested. He said sectors tied more directly to the domestic economy had signs that were "not bad, but not great."
In the report, Statistics Canada said net employment gains in September were all in the public sector while private sector employment actually lost 17,100 jobs, suggesting big private-sector losses outside manufacturing and construction.
At 8:10 a.m. (1210 GMT), the Canadian unit was at C$1.0443 to the U.S. dollar, or 95.76 U.S. cents, up from C$1.0522 to the U.S. dollar, or 95.04 U.S. cents, at Thursday's close.
Domestic bond prices, which weakened slightly after the jobs data, were pinned lower across the curve. (Editing by Jeffrey Hodgson)
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