CANADA FX DEBT-C$ down on low commodity prices, central bank view

* Canadian dollar at C$$1.1031, or 90.65 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Sept 22 (Reuters) - The Canadian dollar retreated
to its weakest level in nearly a week against the greenback on
Monday, as commodity prices softened on concerns about Chinese
demand, and following Bank of Canada comments that indicated it
might be in no hurry to raise interest rates, despite higher
inflation data. 
    Over the weekend, Bank of Canada Governor Stephen Poloz said
the Canadian economy still had a significant amount of room to
grow, noting the higher inflation over the past half year was
due to one-off factors.
    Senior Deputy Governor Carolyn Wilkins reinforced the
central bank's position in a speech on Monday, when she also
said it was possible the policy rate would need to be below
neutral for some time, even after the output gap closed, to keep
inflation on target.
    "Wilkins' speech didn't do much to curtail today's moves. It
was more supportive, actually, of that trend if anything," said
Mazen Issa, macro strategist at TD Securities.
    "Wilkins speech was fairly substantial content-wise,
providing some insight on the latest thinking on the Bank of
    The Canadian dollar, which was underperforming most
major currencies, was trading at C$1.1031 to the U.S. dollar, or
90.65 U.S. cents, weaker than Friday's close of C$1.0947, or
91.35 U.S. cents.
    "More broadly, we continue to see commodity prices weaken
and that's not helpful for the Canadian dollar either," said
Mark Chandler, head of Canadian fixed income and currency
strategy at RBC Capital Markets.
    The Australian dollar touched a seven-month low against the
U.S. dollar, hurt by comments from China's finance minister on
Sunday in which he said the country would not dramatically alter
its economic policy because of any one economic indicator.
    As an exporter of oil and other natural resources, the
Canadian dollar is sensitive to resources prices and to the
moves of other commodities-driven currencies.
    The market also worried that manufacturing data coming out
on Tuesday from China, the world's second largest economy and
one of the world's largest commodities consumers, will likely
show stalled growth. 
    Domestically, retail sales on Tuesday will be the only
economic data this week. Markets are looking for a modest gain
in the headline and flat core sales.
    "The risk is we may actually get a weaker print, so that
could reinforce some of the downtrend in the Canadian dollar
from today's moves," said Issa.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 3 Canadian cents
to yield 1.156 percent and the benchmark 10-year 
rising 21 Canadian cents to yield 2.228 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway and Andre