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CANADA FX DEBT-C$ rebounds from 1-month low; ends higher

Published 11/02/2009, 04:33 PM
Updated 11/02/2009, 04:36 PM

* C$ recovers after hitting 1-month low

* Employment data, Fed in focus this week

* Bond prices end lower across curve (Recasts)

By Frank Pingue

TORONTO, Nov 2 (Reuters) - Canada's currency bounced off a one-month low to rise against a weaker U.S. dollar on Monday, helped by higher commodity prices, but the move was limited ahead of key Canadian jobs data due later this week.

The price of oil, a key Canadian export whose price often influences the currency, was given a boost as strong U.S. manufacturing data helped stoke optimism for a turnaround in fuel demand. [O/R]

That helped lift the Canadian dollar as high as C$1.0715 to the U.S. dollar, or 93.33 U.S. cents, which was comfortably off its overnight low of C$1.0871 to the U.S. dollar, or 91.99 U.S. cents, its lowest level since Oct. 2.

The rebound was aided by a slide in the U.S. dollar as its safe-haven appeal was crimped by the latest economic data. [FRX/]

But the Canadian dollar trimmed a lot of its gain by the end of the session, which some experts said had light flows because it was the first day of the fiscal year for Canadian banks.

The Canadian data calendar is light until the employment figures come out on Friday, leaving the currency vulnerable to outside influences.

"The next couple of days should be dictated by the moves in the U.S. dollar and U.S. data," said David Bradley, director of foreign exchange trading at Scotia Capital.

The Canadian economy is expected to have created 10,000 jobs in October, while the jobless rate is seen rising to 8.5 percent from 8.4 percent in September.

Canadian employers hired six times more workers than expected in September, knocking down the unemployment rate for the first time since July 2008. [ID:nN09253705]

The Canadian dollar closed at C$1.0778 to the U.S. dollar, or 92.78 U.S. cents, up from C$1.0819 to the U.S. dollar, or 92.43 U.S. cents, at Friday's close.

This week also features policy announcements from several major central banks, including the U.S. Federal Reserve and European Central Bank, as well as a G20 finance ministers' meeting. [M/DIARY] At issue in all cases is whether governments will continue to take special measures to keep financial markets liquid.

BOND PRICES SLIP

Canadian bond prices ended down across the curve alongside a slide in the bigger U.S. Treasury market as demand for more secure government debt faded after U.S. economic data came in stronger than expected.

The two-year bond fell 5 Canadian cents to C$99.68 to yield 1.407 percent, while the 10-year bond lost 15 Canadian cents to C$102.50 to yield 3.440 percent. (Editing by Peter Galloway)

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