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TSX slips lower

TORONTO (Reuters) - Canada's currency closed lower versus the greenback yesterday as investors continued to trade on last week's disappointing Canadian jobs report due to the lack of any fresh data to influence direction.

The sell-off began early in the session and eventually knocked the currency to C$1.0929 to the US dollar, or 91.50 US cents, its lowest level in nearly two weeks.

The Canadian dollar moved off the session low but was unable to snap a skid that has now seen it close lower in three straight sessions.

"It's a continuation of a trend, this is the third straight day that we have seen softening so there is at least a modest technical trend in place," said Eric Lascelles, chief economics and rates strategist at TD Securities.

"And when I look at stock markets I see that equities are down a little and that may have prompted a modest safe haven bid that's leaving the Canadian dollar out in the cold."

The Canadian dollar closed at C$1.0887 to the US dollar, or 91.85 US cents, down from C$1.0823 to the US dollar, or 92.40 US cents, at Friday's close.

The slide comes on the heels of a report on Friday that showed the Canadian economy shed 44,500 jobs in July, more than double the market forecast.

George Davis, chief technical strategist at RBC Capital Markets, said the Canadian dollar's performance could hinge on the actions of the US Federal Reserve, which ends a two-day policy meeting tomorrow. The central bank is expected to keep its fed funds rate at zero to 0.25 percent.

The Canadian currency's fall built on a 0.4 percent slide last week, a move driven by the jobs report and comments from Finance Minister Jim Flaherty, who warned that steps could be taken to slow the ascent of the Canadian dollar if it became overly strong.

Canadian bond prices all ended higher and reclaimed losses suffered during Friday's session as investors exited North American equities and moved back into more secure government debt.

In Toronto, the S&P/TSX composite index fell 91.66 points to 10,793.67, while in New York the Dow Jones industrial average ended down 32.12 points at 9,337.95.

The rise in bond prices comes ahead of a slew of economic markers this week, including the US Federal Reserve's statement on interest rates and the state of the economy, as well as US government figures for monthly retail sales.

In Canada, July housing starts data will be released today, followed by yesterday's release of June merchandise trade figures, and Friday's June manufacturing sales data.

Dealers will also keep watch on this week's US Treasury auctions of $75 billion in three and 10-year notes, along with 30-year bonds. The total of the auctions is a record size for a quarterly refunding.

The two-year Canadian bond ended up 13 Canadian cents at C$99.17 to yield 1.411 percent, while the 10-year bond rose 50 Canadian cents to C$101.60 to yield 3.555 percent.

The 30-year bond gained 75 five Canadian cents to C$116.05 to yield 4.034 percent. In the US, the 30-year bond yielded 4.522 percent.

Canadian bonds underperformed their US counterparts across most of the curve. The Canadian 30-year bond was about 48.8 basis points below the US 30-year yield, versus about 53.4 basis points below on Friday.