CANADA FX DEBT-C$ claws back some value after six-month low
* Canadian dollar ends at C$1.1057 or 90.44 U.S. cents * Breached psychological C$1.11/90 U.S. cent barriers in session * Bond prices mostly lower across the maturity curve (Adds strategist comment; updates prices to close) By Alastair Sharp TORONTO, Sept 24 (Reuters) - The Canadian dollar made a slight gain against its U.S. counterpart on Wednesday after hitting its weakest level in six months, but further weakness is expected as U.S. bond yields rise and Canada's central bank takes a dovish tone. Weak commodity prices are adding to the lack of interest in buying the loonie, as resource-rich Canada's currency is colloquially known, strategists said. "U.S. yields are picking up and that does underpin a stronger dollar/Canada" rate, or weaker Canadian dollar, said Greg Moore, a senior currency strategist at Royal Bank of Canada. Canadian bond prices were lower across the curve, meaning yields rose, but the move was more distinct in U.S. Treasuries. Bank of Canada officials have noted this week that one-off factors led to stronger inflation so far this year, and said the economy can work at full capacity with stable inflation at a lower rate than it has historically. "In the absence of any strong economic results to come this week, and that continued tone from the Bank of Canada, Canada seems to be losing a little bit of ground," said Don Mikolich, executive director for foreign exchange sales at CIBC World Markets. "Weak commodity prices are also not helping at this stage either." The Canadian dollar broke a three-session slide after breaching C$1.11, or 90 U.S. cents, a key resistance level. The Canadian dollar ended the day changing hands for C$1.1058 to the greenback, or 90.43 U.S. cents, stronger than Tuesday's close at C$1.1069, or 90.34 U.S. cents. At one point in the session it hit C$1.1122, its weakest since March 26, and RBC's Moore said the currency could test fresh 2014 levels above C$1.1279 in the next month. He sees it at C$1.15 by year-end. Canadian government bond prices slipped, with the two-year down 4.5 Canadian cents to yield 1.145 percent and the benchmark 10-year fell 26 Canadian cents to yield 2.200 percent. (Additional reporting by Solarina Ho; Editing by Peter Galloway)
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