* C$ hits high of 97.21 U.S. cents
* Canada adds 35,800 jobs in August
* Bond prices mixed
TORONTO, Sept 10 (Reuters) - The Canadian dollar rallied against the greenback to hit a fresh three-week high on Friday after domestic jobs data for August came in stronger than expected.
The currency benefited from news that Canada's economy added 35,800 jobs in August, slightly more than consensus. The headline number left an initial impression that the labor market was picking up a little steam. [ID:nSCLAKE65B]
After the data, the Canadian dollarrose around 30 pips to touch a session high of C$1.0287 versus the U.S. dollar, or 97.21 cents, its strongest since Aug. 19.
Doug Porter, deputy chief economist at BMO Capital Markets, noted that employment excluding education had actually fallen.
"The majority of industries actually saw declines of employment in the month. The initial reaction has been to bid the Canadian dollar stronger, but I think after the details are digested, it might be seen as a bit of a disappointment later today," he said.
Analysts said the numbers did little to sway expectations regarding the Bank of Canada's next interest rate decision in October.
The central bank nudged its overnight rate target up by 25 basis points to 1 percent on Wednesday and, contrary to most economists' expectations, did not signal a subsequent pause in rate hikes. Most primary dealers polled by Reuters, however, see a pause for the remainder of the year. [ID:nN08241537] [ID:nN08120346]
"I think that the Canadian dollar, when you look at it more broadly, is going to be more dictated by events abroad, so in terms of how much legs this report will have, I think it really depends on what we see in U.S. demand activity numbers over the next several weeks and as well what happens broadly in terms of risk aversion," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.
"I think we've gone as far as we can on the domestic data and policy moves in Canada."
At 7:52 a.m. (1152 GMT), the Canadian dollarstood at C$1.0307 to the U.S. dollar, or 97.02 U.S. cents, up from Thursday's finish at C$1.0337 to the U.S. dollar, or 96.74 U.S. cents.
The commodity-linked currency was already slightly firmer heading into the report, partly supported by a jump in crude oil prices. [O/R]
Later in the day, Bank of Canada Governor Mark Carney will participate in a conference of finance officials at Spruce Meadows in Alberta.
As investors digested the details of the jobs report, domestic bond prices were mixed while U.S. Treasuries rose, recovering some ground after a sharp sell-off. [US/].
The two-year Canada bondwas unchanged at to yield 1.467 percent, while the 10-year bond gained 11 Canadian cents to yield 2.951 percent. (Additional reporting by Euan Rocha; Editing by Frank McGurty)
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