CANADA FX DEBT-C$ weakens modestly after China data
* Canadian dollar at C$1.1213 or 89.18 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, March 24 (Reuters) - The Canadian dollar weakened modestly against the greenback on Monday after data showed manufacturing activity in China contracted in the first quarter, underscoring market concerns about slower growth in the world's second-largest economy. An index of manufacturing in China fell to an eight-month low in March. The index has shown contraction since January amid a string of other weak economic indicators from China this year. The Canadian dollar is sensitive to economic developments in China, which is a major consumer of natural resources. "Any signs of a slowdown has the market concerned, both on the commodity demand side of things, plus it ratchets down global growth projections," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. The Canadian dollar was at C$1.1213 to the greenback, or 89.18 U.S. cents, slightly weaker than Friday's close of C$1.1210, or 89.21 U.S. cents. A lack of domestic economic data this week will leave investors focused on bigger-picture themes, as well as U.S. data, Mikolich said. He added that while the C$1.1250 to C$1.13 area will be the next psychologically important level to watch for, there may not be any domestic factors this week that would push the loonie to those lows. More dovish-than-expected comments from Bank of Canada Governor Stephen Poloz hit the Canadian dollar last week in combination with U.S. Federal Reserve musings about a potentially faster timetable for eventually raising interest rates. Bank of Canada Deputy Governor Tim Lane is on tap to speak later on Monday. While the topic of his speech is expected to focus on the financial system, investors will watch to see if he sheds any light on the path of monetary policy. Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 1-1/2 Canadian cents to yield 1.080 percent and the benchmark 10-year down 7 Canadian cents to yield 2.494 percent. (Editing by Peter Galloway)
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