* Bernanke comments on tightening policy boost dollar
* Dollar/yen on pace for biggest daily gain in 2 months
* Canada dollar at 1-year high after strong jobs data
(Adds comment, updates prices)
By Wanfeng Zhou
NEW YORK, Oct 9 (Reuters) - The dollar rose broadly on
Friday after Federal Reserve Chairman Ben Bernanke said the
U.S. central bank will be ready to tighten monetary policy as
an economic recovery takes hold.
The greenback, however, fell versus the Canadian dollar,
which hit a one-year high after Canada reported employers added
six times as many jobs as expected in September, knocking down
the unemployment rate for the first time since July 2008.
The U.S. dollar, which had taken a beating for much of the
week, recovered some of its losses against the euro on Friday
and pulled away from an 8-1/2-month low hit against the yen
earlier in the week. Despite Friday's gains, the dollar
remained lower against a currency basket on the week.
Bernanke, in remarks delivered late on Thursday, said that
while the Federal Reserve must continue to prop up the economy
for an extended period, it cannot do so indefinitely for fear
of an inflationary surge.
The Fed has cut interest rates to near zero percent and
pumped hundreds of billions of dollars into the financial
system to help boost the economy. For more see
[].
The dollar's rise "was certainly sparked by Fed Chairman
Bernanke's reassuring comments," said Joe Manimbo, currency
trader at Travelex Global Business Payments in Washington.
"Also, I think given the extent of the dollar's losses this
week and being the last day of the week ahead of a long
weekend, that helped to spur maybe a little bit of
profit-taking."
The U.S. bond market will be closed on Monday for the
Columbus Day holiday. Monday is also a holiday in both Japan
and Canada.
In midday trading, the ICE Futures U.S. dollar index
<.DXY>, which tracks the greenback against a basket of six
major currencies, was up 0.5 percent at 76.272, above
Thursday's 14-month low of 75.767. The index is on track for a
weekly loss of about 1 percent.
Despite the market's reaction to Bernanke's comments,
analysts said he did little more than state the obvious in that
the Fed would be ready to tighten policy when the economy
improves.
"He did not give any hints as to what the timing of the
tightening might be. If anything, he actually repeated that
policy is likely remain accommodative for an extended period,"
said Vassili Serebriakov, currency strategist at Wells Fargo in
New York.
"We'll see where we end today," Serebriakov said. "I think
the overall short-term trend for dollar weakness is still very
much intact."
CANADA SURGES
Against the yen, the dollar rose 1.5 percent to 89.71 yen
<JPY=>, on track for its biggest daily gain in two months. The
dollar fell as low as 88.01 on electronic trading platform EBS
on Wednesday, its weakest since January.
The euro <EUR=> slipped 0.5 percent to $1.4722, retreating
from a two-week high around $1.4815 hit on Thursday.
European Central Bank President Jean-Claude Trichet said on
Thursday that U.S. support for a strong dollar was important
and excessive currency moves were unwelcome. []
The Canadian dollar jumped to a one-year high after the
government reported net job gains of 30,600 in September,
compared with the consensus forecast of a 5,000 increase. The
unemployment rate fell to 8.4 percent. []
The U.S. dollar fell 0.8 percent to C$1.0431 after hitting
as low as C$1.0411 <CAD=>, according to Reuters data.
Kathy Lien, director of currency research at GFT Forex in
New York, said if the dollar closes below C$1.05 Friday, "there
is no major support in the currency pair until parity."
"When you have a country like Canada experiencing
larger-than-expected job growth and another experiencing
larger-than-expected job losses, you can imagine what the trend
of the currency pair will be going forward," she wrote in a
research note.
(Editing by Leslie Adler)
