CANADA FX DEBT-C$ stronger, all eyes on Bank of Canada statement
* Canadian dollar at C$1.1228 or 89.06 U.S. cents * Bond prices lower across the maturity curve By Solarina Ho TORONTO, Oct 21 (Reuters) - The Canadian dollar strengthened against the U.S. dollar and outperformed other major currencies on Tuesday after last week's volatility, while investor focus shifted to Wednesday's monetary policy statement by the Bank of Canada. Analysts said a return of risk appetite to global markets after last week's rout on concerns about the world economy helped bolster the Canadian currency. "Over the past couple of weeks, (the Canadian dollar) saw a pretty notable depreciation and I think this is just a bit of a retracement," said Greg Moore, senior currency strategist, at RBC Capital Markets. The Bank of Canada is widely expected to hold its key interest rate at 1 percent, where it has been for four years. "I'd say neutral with a dovish slant is essentially what we continue to expect from the Bank of Canada," said Moore, noting they've been emphasizing some of the more dovish scenarios in recent speeches. "It's the same sort of message they've been pushing for a little over a year." Moore said it was not entirely clear how the Bank of Canada will interpret the impact of the major drop in oil prices on the economy and noted it will also be the first major central bank to have a meeting since last week's market volatility. The Canadian dollar closed at C$1.1228 to the greenback, or 89.06 U.S. cents, up from Monday's close of C$1.1284, or 88.62 U.S. cents. The currency was helped earlier in the session by Chinese data, which showed China's economy grew by a stronger-than-expected 7.3 percent in the third quarter. It was still the slowest pace since the global financial crisis, however. The loonie is often sensitive to economic news out of China, which is a major consumer of commodities, including oil. "The slight surprise to the upside has helped to put a bid under risk assets and the commodity-correlated currency space," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. Canadian government bond prices were lower across the maturity curve, with the two-year down 2 Canadian cents to yield 0.975 percent and the benchmark 10-year down 25 Canadian cents to yield 1.965 percent. (Additional reporting by Leah Schnurr; Editing by Meredith Mazzilli and Diane Craft)
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