FOREX-Dollar boosted by Bernanke comments; Loonie soars

* Bernanke comments on tightening policy boost dollar

* Dollar/yen on pace for biggest daily gain in 2 months

* Canada dollar at 1-year high after strong jobs data (Adds comment, updates prices, changes byline)

By Leah Schnurr

NEW YORK, Oct 9 (Reuters) - The dollar rose broadly on Friday after Federal Reserve Chairman Ben Bernanke said the central bank will be ready to tighten monetary policy as an economic recovery takes hold.

The U.S. dollar, which took a beating for much of the week, recovered some losses against the euro and pulled away from a more than 8-month low against the yen earlier in the week. Despite Friday's gains, the greenback remained lower against a basket of currencies for the week.

The dollar was also down against the Canadian dollar after data showed Canada added six times as many jobs as expected in September. The unemployment rate was down for the first time since July 2008. For details, see [ID:nN0953178]

In remarks delivered late Thursday, Bernanke said that while the Federal Reserve must continue to prop up the economy for an extended period, it cannot do so indefinitely for fear of an inflationary surge. [ID:nN08537898].

"People are anticipating that now the Fed may be more inclined to raise rates earlier than anticipated," said Kevin Chau, currency strategist at IdeaGlobal in New York.

"I think they will continue to jawbone by saying they're vigilant, but I think they will still hold off (raising rates) until the second half of 2010."

The Fed has cut interest rates to near zero percent and pumped hundreds of billions of dollars into the financial system to help boost the economy.

The low rates have made the dollar more attractive for use in a carry trade, in which investors borrow in one currency and use the funds to buy a different higher-yielding currency.

Analysts also noted the dollar is getting some support from profit-taking after a lackluster week.

In midday trading, the ICE Futures U.S. dollar index .DXY, which tracks the greenback against a basket of six major currencies, was up 0.7 percent at 76.457, above Thursday's 14-month low of 75.767. The index is on track for a weekly loss of close to 1 percent.

LOONIE SURGES

The Canadian dollar jumped to a one-year high after data showed 30,600 new jobs last month compared with the consensus forecast calling for an increase of 5,000. The unemployment rate fell to 8.4 percent.

The U.S. dollar declined 0.7 percent to C$1.0439 after falling as low as C$1.0411 CAD=, according to Reuters data.

Kathy Lien, director of currency research at GFT Forex in New York, said if the dollar closes below C$1.05 on Friday, "there is no major support in the currency pair until parity."

"When you have a country like Canada experiencing larger-than-expected job growth and another experiencing larger-than-expected job losses, you can imagine what the trend of the currency pair will be going forward," she wrote in a research note.

Despite the market's reaction to Bernanke's comments, analysts said the Fed chief did little more than state the obvious -- the Fed would be ready to tighten policy when the economy improves.

"He did not give any hints as to what the timing of the tightening might be. If anything, he actually repeated that policy is likely to remain accommodative for an extended period," said Vassili Serebriakov, currency strategist at Wells Fargo in New York.

The dollar rose 1.6 percent to 89.80 yen JPY=, on track for its biggest daily gain in two months. The dollar fell as low as 88.01 on electronic trading platform EBS on Wednesday, its weakest since January.

The euro EUR= slipped 0.6 percent to $1.4698, retreating from a two-week high of about $1.4815 on Thursday.

(Additional reporting by Wanfeng Zhou; editing by Jeffrey Benkoe)