CANADA FX DEBT-C$ eases as U.S. data lifts greenback; focus on U.S. jobs

* C$ ends at C$1.0348 vs US$, or 96.64 U.S. cents
    * U.S. data buoys greenback, boosts Fed "taper" expectations
    * Market focus on U.S. jobs data on Friday
    * Canadian bond prices mostly lower

    By Andrea Hopkins
    TORONTO, Aug 1 (Reuters) - The Canadian dollar weakened
against the U.S. dollar on Thursday as U.S. economic data came
in strong and major central banks kept monetary policy loose,
bolstering expectations that the U.S. Federal Reserve will start
scaling back its stimulus measures in the fall.
    The U.S. dollar, global stock markets, and crude oil all
rallied sharply, with the benchmark S&P 500 stock index climbing
above 1,700 for the first time, as central banks in the euro
zone and Britain joined the Fed in sticking with easy-money
    The European Central Bank and the Bank of England both ended
policy meetings by leaving interest rates at record lows, a day
after the Fed said the U.S. economy still needed its support and
avoided any mention of a change to its stimulus measures. 
    The promise of abundant liquidity came as data showed U.S.
manufacturing picked up sharply in July, with one measure
pointing to the highest growth in two years. The U.S. figures
built on reports showing euro zone industrial activity picking
up for the first time in two years, greater stability in China's
factory sector, and a surge in British production.
     "Today's price action didn't have much to do with Canada,"
said Greg Moore, FX Strategist at TD Securities. "It was focused
on the main events elsewhere - in this case the U.S. data was
the main driving force that helped reinforce expectations the
Fed will, in fact, be tapering come September, or at least in
the autumn sometime, which is U.S. dollar positive," 
     The Canadian dollar ended the North American
session at C$1.0348 versus the U.S. dollar, or 96.64 U.S. cents,
down from Wednesday's close of C$1.0272, or 97.35 U.S. cents. It
was the weakest close in more than a week.    
    Markets now turn their focus to U.S. nonfarm payrolls for
July, which are due out on Friday. A survey of analysts by
Reuters showed they expect employers to have added about 184,000
jobs in July, which might suggest the economy is strong enough
to allow the Fed to begin ending its quantitative easing
    "Tomorrow's nonfarm is really the next and final big event
and I think that is the one that really matters," said Camilla
Sutton, chief currency strategist at Scotiabank. "If nonfarm
comes in at least close to expectations or close to 200,000, it
will drive expectations for (Fed) tapering in September." 
    Moore said a higher-than-expected rise in nonfarm payrolls
would drive the U.S. dollar higher, putting the Canadian
currency on the defensive and back at levels seen in mid-July.
    "It could be quite volatile," he said. "If we do see a
stronger U.S. number, we could see dollar-CAD head well into the
C$1.04 range you could easily see another big figure lower for
the Canadian dollar from here." 
    Government bond prices were mostly lower. The two-year bond
 was down 8 Canadian cents to yield 1.193 percent,
while the benchmark 10-year bond fell 84 Canadian
cents to yield 2.554 percent.