CANADA FX DEBT-C$ weaker after Fed minutes, budget fight shift
* C$ at C$0.9880 versus US$, or $1.0121 * U.S. fiscal deal boost gives way to debt ceiling worry * Fed minutes show growing concern about stimulus program * North American employment data due on Friday By Alastair Sharp TORONTO, Jan 3 (Reuters) - The Canadian dollar weakened slightly against its U.S. counterpart on Thursday as optimism over a deal to avert fiscal calamity in the United States gave way to concerns over issues Washington has yet to resolve. The Canadian currency was also hurt by signs that ultra-loose monetary policy in its southern neighbor and main trading partner could be cut short, with the minutes from last month's U.S. Federal Reserve meeting showing growing reticence about the policy of buying bonds to stimulate growth. "The latest Fed minutes added more fuel to the (U.S.) dollar's rally as they showed a growing camp of policymakers in favor of reducing the bank's pro-growth bond purchases," Joe Manimbo, a senior market analyst for Western Union Business Solutions, wrote in a note. The Canadian dollar ended the day at C$0.9880 to the greenback, or $1.0121, compared with C$0.9852, or $1.0150, at Wednesday's North American close. After the partial resolution of a rancorous fiscal debate in Washington that transfixed global markets, investors have a few short weeks in which to focus on more material indicators of economic growth. "We have a window where we are going to shift our attention back to fundamentals over the next couple of weeks, so we'll be looking at labor data, but as well next week we have European Central Bank meetings," said Camilla Sutton, chief currency strategist at Scotiabank. Both Canada and the United States release jobs numbers on Friday, with Canada expected to have added a much lower number of new positions in December than in two of the previous three months. The Canadian currency had strengthened sharply on Wednesday after the U.S. fiscal deal was reached, but looming battles over spending cuts and debt limits curtailed the celebration. "With the lack of bipartisan support as far as politics generally on Capitol Hill, we know we're going to have another relatively fraught period with the debt ceiling and spending scenarios coming around quickly," said Jeremy Stretch, head of foreign exchange strategy at CIBC World Markets in London. "That's going to be one factor that will mitigate a strong risk-on move being perpetuated." Stretch said it would be difficult for the Canadian dollar to break past C$0.9840 in the short term. Prices for Canadian government debt were lower across the curve, with the two-year bond off 4 Canadian cents to yield 1.187 percent, while the benchmark 10-year bond fell 47 Canadian cents to yield 1.923 percent.