* Focus on speech by Bank of Canada governor
* Bonds mixed as investors wait for news on U.S. plan
By John McCrank
TORONTO, Sept 25 (Reuters) - The Canadian dollar rose against a broadly weaker U.S. dollar on Thursday as U.S. weekly jobless claims data painted a bleaker picture of the economy and investors worried about delays to the U.S. rescue package for the financial sector.
Canadian bond prices were mixed as the market waited for news on the U.S. plan, which is working its way through Congress.
At 9:22 a.m. (1322 GMT), the Canadian unit was up 0.5 percent at C$1.0314, or 96.96 U.S. cents, from C$1.0367, or 96.46 U.S. cents, at Wednesday’s close.
The currency rose as high as C$1.0305, or 97.04 U.S. cents, after data showed that 493,000 U.S. workers filed for jobless benefits last week.
“It is now almost 500,000 print now and that’s getting close to recessionary levels and indicates a continuation of job destruction in the U.S.,” said Matthew Strauss, senior currency strategist at RBC Capital Markets.
While the fallout from the U.S. housing downturn and the credit crunch have been weakening the greenback, the Canadian dollar has managed to gain more than 4 percent in the past two weeks as the Canadian economy has been less affected by the market turmoil.
Bank of Canada Governor Mark Carney’s speech in Montreal this afternoon on “Reflections on Recent Economic Developments,” should give more insight into where Canada stands amid the financial turbulence.
“I think it will be a very carefully crafted speech and the words very well chosen, so as not to create any further alarm in the market, but to give a good depiction of what’s happening,” Strauss said.
While the speech will be closely watched, investors will be keeping an eye on developments on the U.S. government’s proposed $700 billion plan to buy up the bad debt clogging financial markets.
Canadian bond prices were mixed and little changed from the previous close as markets awaited news on the U.S. rescue plan.
Sal Guatieri, senior economist at BMO Capital Markets, said the market may get a boost on safe haven buying as investors look for relatively stable assets.
“I would think government markets would remain fairly well bid, given the concern about the unfolding credit crisis and how the (U.S.) government’s rescue plan will work out,” he said.
The two-year bond dipped 3 Canadian cents to C$99.76 to yield 2.864 percent, while the 10-year bond added 5 Canadian cents to C$104.70 to yield 3.667 percent.
The yield spread between the two- and 10-year bond was 81.7 basis points, down from 84.1 basis points at the previous close.
The 30-year bond shed 3 Canadian cents to C$114.65 for a yield of 4.123 percent. In the United States, the 30-year Treasury yielded 4.380 percent.
The three-month when-issued T-bill yielded 1.95 percent, down from 2.02 percent at the previous close. (Reporting by John McCrank; Editing by Peter Galloway)