* C$ hits C$1.0160 to the U.S. dollar * Canada economy adds 21K jobs, lifts C$ * Bonds lower after data By Jennifer Kwan TORONTO, March 12 (Reuters) - The Canadian dollar rose toits highest level against the U.S. currency since July 2008 onFriday after Canadian employment data came in slightly betterthan forecasts. Canada"s unemployment rate fell to 8.2 percent in Februaryfrom 8.3 percent in January as 20,900 more people found work inthe month, with all the gains coming from full-time jobs,Statistics Canada said on Friday. [ID:N12253705] Economists surveyed by Reuters had forecast net job growthof 20,000 jobs in February and an 8.3 percent unemploymentrate. ECONCA "It"s a very strong labor report and dollar/Canada hasbroken into a new 20-month low. Considering it wasn"t releasedon the same day as (U.S.) nonfarm (payrolls data) it could geteven more attention than it usually does. All in all, it"s goodfor the Canadian dollar," said Camilla Sutton, currencystrategist at Scotia Capital. The dollar touched C$1.0160 to the U.S. dollar, or 98.43U.S. cents, from about C$1.0234, or 97.71 U.S. cents justbefore the report. At 7:38 a.m. (1238 GMT), the Canadian dollar fell backslightly to C$1.0173 to the U.S. dollar, or 98.30 U.S., stillup from C$1.0243 to the U.S. dollar, or 97.63 U.S. cents, atThursday"s close. Yields on overnight index swaps, which trade based onexpectations for the Bank of Canada"s key policy rate, edgedhigher after the report, showing the market saw tightening asslightly more likely than before the data. The Canadian dollar has been rallying in recent weeks onexpectations Canada could hike interest rates well ahead of theUnited States. The market suggests there are high odds the rate, now at0.25 percent, will be around 1 percent by October. BOCWATCH Bond prices were mostly lower after the domestic data, andwere also affected by moves in the United States, whereTreasuries prices were soft ahead of U.S. economic data duelater in the session and a Federal Reserve interest ratemeeting next week. [US/] (Reporting by Jennifer Kwan; Editing by Jeffrey Hodgson)
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