CANADA FX DEBT-C$ weakens to fresh 4-year low on expectations of dovish BoC

* Canadian dollar at C$1.0948 or 91.34 U.S. cents
    * Focus on central bank Jan. 22, dovish expectations
    * Bond prices mostly lower across the maturity curve

    By Andrea Hopkins
    TORONTO, Jan 14 (Reuters) - The Canadian dollar continued to
weaken on Tuesday, falling to a fresh four-year low against its
U.S. counterpart as investors remained concerned ahead of next
week's Bank of Canada interest rate decision and policy
    With the currency flirting with the psychologically
important C$1.10 level, traders said momentum remained against
the commodity-linked Canadian dollar after weak economic data
last week and concern about next week's central bank meeting.
    "We got to a new low today, which suggests there is ongoing
downward momentum on the Canadian dollar," said Camilla Sutton,
chief currency strategist at Scotiabank. 
    "It is ... based on everything from a fundamental shift
after disappointing data last week, ongoing positioning to be
short Canada, the outlook for the Bank of Canada on the 22nd and
expectations that Governor Poloz will continue to sound very
    The Canadian dollar ended the North American
session at C$1.0948 to the greenback, or 91.34 U.S. cents, well
below Monday's North American close at C$1.0846 to the
greenback, or 92.20 U.S. cents.
    It fell as far as C$1.0960, the currency's weakest level
since October 2009, passing the nadir reached on Friday after
the Canadian government released a dismal December employment
    The jobs report fueled expectations the Bank of Canada will
maintain its recent dovish stance, one of the factors that is
seen keeping pressure on the loonie in 2014.
    The dollar also sagged after Canada's junior finance
minister, Kevin Sorenson, said Tuesday the country's
manufacturing sector was happy with the weaker currency, adding
that it presented "remarkable opportunities." 
    Scotiabank's Sutton said a drop to the C$1.10 level would be
a significant development, particularly for exporters who had
struggled to compete when the Canadian dollar was at parity, and
often stronger, than the U.S. currency.
    "C$1.10 is psychologically very important, it's a very key
whole number - a full 10 cents away from parity, which is a big
deal if you are an exporter... a 10 percent depreciation in CAD
since parity really does shift the economics for Canadian
exporters," Sutton said.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year bond down 4
Canadian cents to yield 1.057 percent and the benchmark 10-year
 down 26 Canadian cents to yield 2.577 percent.