CANADA FX DEBT-C$ weaker on China worries, Bank of Canada in focus
* C$ at C$1.0323 vs US$, or 96.87 U.S. cents * Worries about tightening in China hit loonie * Bank of Canada rate decision due at 10:00 am ET (1400 GMT * Bond prices higher across maturity curve By Leah Schnurr TORONTO, Oct 23 (Reuters) - The Canadian dollar weakened on Wednesday on worries over tightening financial conditions in China and as investors were cautious ahead of a monetary policy decision from the Bank of Canada later in the morning. China's primary short-term money rates rose after a policy adviser to the People's Bank of China said on Tuesday that the central bank may tighten cash conditions in the financial system to address inflation risks. Investors are worried tightening could hamper growth in China, the world's second-largest economy and a major consumer of commodities. China's economy grew at its quickest pace this year in the third quarter in a rebound fueled largely by investment, although signs were already emerging that the pick up in activity may lose some steam. "Worries about tightening there clearly is a negative for commodities, which in turn is a negative for the Canadian dollar," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets. The Canadian dollar was at C$1.0323 versus the greenback, or 96.87 U.S. cents, weaker than Tuesday's close of C$1.0289, or 97.19 U.S. cents. Investors were also awaiting an interest rate decision and statement from the Bank of Canada. The central bank is expected to keep rates steady at 1 percent. The accompanying statement and subsequent press conference from Governor Stephen Poloz will be bigger focal points, with investors sensitive to any change in tone that might indicate when the Bank will eventually raise rates. Analysts are also looking for the central bank's view on the economic outlook for both Canada and the United States. In a speech earlier this month, Senior Deputy Governor Tiff Macklem said the central bank expects lower growth in the third quarter than had been previously forecast. "We've already heard they're going to cut their forecast, so that's not going to be a surprise when they cut their near-term forecast," said Reitzes. "What they do with the rest of 2014 beyond the first quarter and 2015 is a bit of a question mark." Government bond prices were higher across the maturity curve with the two-year bond up 2-1/2 Canadian cents to yield 1.156 percent and the benchmark 10-year bond up 19 Canadian cents to yield 2.459 percent.
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