CANADA FX DEBT-C$ at nearly 1-week low with Bank of Canada in view
* Canadian dollar at C$1.0906 or 91.69 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, Sept 2 (Reuters) - The Canadian dollar weakened against the greenback on Tuesday to its lowest level in nearly a week, hurt by broad strength in its U.S. counterpart and as investors were wary of taking big bets a day ahead of a monetary policy statement from the Bank of Canada. The decline saw the loonie unwind some of last week's rally and brought it closer to the closely watched C$1.09 level. The Canadian dollar rose 0.6 percent last week, lifted by a number of factors including fund flow speculation and month-end positioning. But the loonie did not gain on Friday following better-than-expected domestic economic growth data and that continued to put the currency on weak footing, said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. At the same time, "we're seeing broad-based U.S. dollar strength this morning, so that's acting as a detriment towards the loonie," he said. The Canadian dollar was at C$1.0906 to the greenback, or 91.69 U.S. cents, weaker than Friday's official close of C$1.0873, or 91.97 U.S. cents from the Bank of Canada. Many market participants were away on Monday for the Labor Day holiday. While the Bank of Canada is widely expected to hold rates at 1 percent on Wednesday, where they have been since 2010, investors will be parsing the tone of the policy statement. The central bank is expected to stick to a cautious message. "We're very likely to get another balanced statement" that will temper an improvement in U.S. growth with expectations Canadian inflation will drift lower, said Smith. "They'll be able to remain accommodative until growth really picks up on a sustainable basis," he said. The jobs report for August will be the other main domestic economic event this week. Forecasts are for the pace of jobs growth to remain sluggish with 10,000 positions created last month. The report could get additional scrutiny coming on the heels of the July report that had to be restated by Statistics Canada due to an error. Canadian government bond prices were lower across the maturity curve, with the two-year down 2-1/2 Canadian cents to yield 1.119 percent and the benchmark 10-year down 60 Canadian cents to yield 2.064 percent. (Editing by Meredith Mazzilli)
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