CANADA FX DEBT-C$ firms but eyes on central bank later in the week
* Canadian dollar at C$1.0965 or 91.19 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, April 14 (Reuters) - The Canadian dollar was slightly stronger against the greenback on Monday, though gains were capped as investors were wary of taking aggressive bets ahead of a policy statement from the Bank of Canada later in the week. Markets were also seeing more risk aversion broadly as Ukraine's president threatened military action after pro-Russian separatists occupying government buildings in the east ignored an ultimatum to leave. At the same time, another group of rebels attacked a police headquarters in the troubled region. With no major domestic data on tap for Monday, investors at home had their attention focused on the Bank of Canada's statement after its monetary policy meeting on on Wednesday. While the central bank is expected to hold rates at 1 percent, analysts will also parse the quarterly Monetary Policy Report, due for release at the same time, for any change in the Bank's tone. The Bank of Canada has been a major driver of the Canadian dollar since last October when the central bank dropped any reference of tightening on the horizon, making for a more dovish tone than markets had expected. "They're still really looking for a weaker currency to flow through into the export sector and that has been slower to materialize," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. "I think they would still like to see the currency remain on the weaker side for a while." The Canadian dollar was at C$1.0965 to the greenback, or 91.19 U.S. cents, modestly stronger than Friday's close of C$1.0979, or 91.08 U.S. cents. Since hitting a 4-1/2-year low last month, the Canadian dollar has gained about 3 percent. Mikolich said key levels to watch for the U.S. dollar-Canadian dollar will be C$1.0958 and C$1.0920 on the downside, and C$1.10 and C$1.1055 on the top. Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 1 Canadian cent to yield 1.052 percent and the benchmark 10-year was down 3 Canadian cents to yield 2.405 percent. (Editing by W Simon)
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