CANADA FX DEBT-C$ at 2-year low with central banks, U.S. data eyed

* C$ at C$1.0641 vs US$, or 93.98 U.S. cents
    * Loonie at lowest since Oct. 2011, momentum to downside
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Dec 2 (Reuters) - The Canadian dollar fell to a
two-year low against the greenback on Monday, ahead of a Bank of
Canada meeting later in the week and as investors awaited a slew
of economic data south of the border for clues on the future of
U.S. monetary policy.
    The drop extended Friday's losses and added on to bearish
momentum after the loonie fell through key technical support
    The currency has suffered of late against a backdrop that
includes a less hawkish Bank of Canada, weaker oil prices and
expectations that the U.S. Federal Reserve will start to wind
down its economic stimulus.
    "People are expecting some more dovish overtones" from the
Bank of Canada's meeting on Wednesday, said John Curran, senior
vice president at CanadianForex, in Toronto.
    "I'd be surprised if (BoC Governor Stephen) Poloz came out
with even more dovish overtones, as the last meeting put his
stamp on his governorship for now. Continuing to use their tools
to weaken the Canadian dollar, I think, would not be wise at
this point in time and I don't see them doing it."
    The Canadian dollar ended the North American
session at C$1.0641 to the greenback, or 93.98 U.S. cents,
weaker than Friday's close of C$1.0620 or 94.16 U.S. cents.
    The loonie traded as far as C$1.0655, its lowest level since
early October 2011. The low previously hit this year in July at
C$1.0609 had represented significant support for the currency,
which it first broke through on Friday.
    The Bank of Canada will release its interest rate and policy
decision on Wednesday following its first meeting since a policy
shift in October when the central bank dropped any mention of a
rate hike.
    That change pushed out market expectations for the next rate
hike into 2015. Rates have been at 1 percent since 2010.
    Domestic data will be light this week until Friday's
Canadian labor market report.
    But south of the border, investors will get a number of
economic reports, including manufacturing activity, private
payrolls, consumer sentiment, third-quarter gross domestic
product and the closely-watched unemployment report.
    On Monday, data showed U.S. factory activity hit a
2-1/2-year high last month, while construction spending
increased solidly in October. 
    The data this week could be key in calibrating market
expectations for when the Federal Reserve may start to wind down
its economic stimulus. 
    Investors are trying to gauge whether the Fed will start to
reduce its amount of bond purchases at its next meeting later in
December or hold off until the new year.
    "Despite the Bank of Canada, perhaps the biggest driver for
U.S. dollar-Canadian dollar could still be U.S. data this week,"
said Greg Moore, FX strategist at TD Securities in Toronto. 
    The two-year bond dipped 2 Canadian cents to
yield 1.107 percent, while the benchmark 10-year bond
 was down 39 Canadian cents to yield 2.605 percent.