CANADA FX DEBT-C$ weakens modestly as investors eye jobs report

Reuters

* Canadian dollar at C$1.0924 or 91.54 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, Aug 7 (Reuters) - The Canadian dollar weakened slightly against the greenback on Thursday, pulling back from the previous session's strong gains as investor focus was turning to the key domestic labor market report at the end of the week.

The loonie saw little reaction to data that showed the value of building permits issued in June surged, contrary to economists' forecasts for a decline.

The Canadian dollar has lost 1.6 percent in the last two weeks as optimism that the U.S. recovery is picking up speed has sent investors into the greenback, pushing the loonie lower.

After Wednesday's rise on the back on better-than-expected trade figures, the loonie is consolidating as investors look to Friday's employment report, said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto.

"That seems to be the chatter is that everyone is just waiting for tomorrow's jobs numbers to be the next catalyst for the next move in U.S. dollar-Canadian dollar," said Issa.

The economy is forecast to have added 20,000 jobs in July after unexpectedly losing jobs the month before. The unemployment rate is seen holding steady at 7.1 percent.

The Canadian dollar was at C$1.0924 to the greenback, or 91.54 U.S. cents, weaker than Wednesday's close of C$1.0913, or 91.63 U.S. cents.

Analysts still expect to see more weakness for the currency.

"The trend we've seen the last couple weeks of a weaker Canadian dollar will resume, we're just looking for some validation from tomorrow's jobs numbers to reassert that trend," said Issa.

The loonie could trade in a range between C$1.0910 and C$1.0940 in Thursday's session, he said.

Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 1 Canadian cent to yield 1.087 percent and the benchmark 10-year unchanged to yield 2.111 percent.

(Editing by W Simon)

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