CANADA FX DEBT-C$ hit by disappointing Canadian jobs report

* Canadian dollar at C$1.0965 or 91.20 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, Aug 8 (Reuters) - The Canadian dollar weakened
against the greenback on Friday, hit by data that showed the
country's economy added far fewer jobs than expected in July,
underscoring the sluggish pace of employment growth.
    Markets broadly were cautious overnight after U.S. President
Barack Obama authorized air strikes on Iraq. 
    But that had little impact on the Canadian dollar in morning
trading, with the jobs report top of mind. Canada's economy
created a net 200 jobs last month, far short of the 20,000
economists had forecast. That comes on the heels of a loss of
jobs in June. 
    The Canadian dollar reversed earlier gains against the
greenback following the report to hit a session low of C$1.0968.
    The report "certainly doesn't suggest any imminent move up
on interest rates, just rates remaining fairly accommodative, so
I think it will result in a bit of downward pressure on the
(Canadian dollar)," said Paul Ferley, assistant chief economist
at Royal Bank of Canada, in Toronto.
    The Canadian dollar was at C$1.0965 to the
greenback, or 91.20 U.S. cents, weaker than Thursday's close of
C$1.0921, or 91.57 U.S. cents.
    The loonie has lost about 2 percent in the last two weeks as
signs that the U.S. economic recovery is picking up steam have
sent investors toward the greenback, pushing the Canadian dollar
    The recent selloff erased the advance the currency made in a
rally through June that saw it reach the low C$1.06 area.
    Camilla Sutton, chief currency strategist at Scotiabank in
Toronto, expects the Canadian dollar to trade comfortably on
either side of the C$1.10 area from here.
    "Overall, we still have significant geopolitical risk
brewing and I think as U.S. dollar-Canadian had moved down close
to C$1.06, it was really getting to a point that was too strong
considering the domestic backdrop, and sitting at C$1.10 is a
far more reasonable level for the currency to be at," she said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3 Canadian cents
to yield 1.051 percent and the benchmark 10-year up
19 Canadian cents to yield 2.055 percent.

 (Additional reporting by Allison Martell Editing by W Simon)