CANADA FX DEBT-C$ firms but eyes on central bank later in the week

* Canadian dollar at C$1.0965 or 91.19 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, April 14 (Reuters) - The Canadian dollar was
slightly stronger against the greenback on Monday, though gains
were capped as investors were wary of taking aggressive bets
ahead of a policy statement from the Bank of Canada later in the
    Markets were also seeing more risk aversion broadly as
Ukraine's president threatened military action after pro-Russian
separatists occupying government buildings in the east ignored
an ultimatum to leave. At the same time, another group of rebels
attacked a police headquarters in the troubled region.
    With no major domestic data on tap for Monday, investors at
home had their attention focused on the Bank of Canada's
statement after its monetary policy meeting on on Wednesday.
    While the central bank is expected to hold rates at 1
percent, analysts will also parse the quarterly Monetary Policy
Report, due for release at the same time, for any change in the
Bank's tone. 
    The Bank of Canada has been a major driver of the Canadian
dollar since last October when the central bank dropped any
reference of tightening on the horizon, making for a more dovish
tone than markets had expected.
    "They're still really looking for a weaker currency to flow
through into the export sector and that has been slower to
materialize," said Don Mikolich, executive director of foreign
exchange sales at CIBC World Markets in Toronto.
    "I think they would still like to see the currency remain on
the weaker side for a while."
    The Canadian dollar was at C$1.0965 to the
greenback, or 91.19 U.S. cents, modestly stronger than Friday's
close of C$1.0979, or 91.08 U.S. cents.
    Since hitting a 4-1/2-year low last month, the Canadian
dollar has gained about 3 percent. Mikolich said key levels to
watch for the U.S. dollar-Canadian dollar will be C$1.0958 and
C$1.0920 on the downside, and C$1.10 and C$1.1055 on the top.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year off 1 Canadian cent
to yield 1.052 percent and the benchmark 10-year was
down 3 Canadian cents to yield 2.405 percent.

 (Editing by W Simon)