CANADA FX DEBT-C$ weakens as oil resumes fall; Bank of Canada in focus

* Canadian dollar at C$1.1385 or 87.83 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Dec 2 (Reuters) - The Canadian dollar softened
against the greenback on Tuesday amid uncertainty over whether
crude oil prices have bottomed after oil resumed its retreat
after recouping some recent losses on Monday.
     Canada is a major exporter of crude and its currency has
fallen in recent months as crude prices have plunged.
     Last week, the Organization of the Petroleum Exporting
Countries decided not to cut back its production targets,
leaving the market nervous about how low crude prices can go.
Prices have been on a five-month decline and touched their
lowest level in five years on Monday before rebounding. 
    "In terms of the trade today, oil prices are down, so (oil
and the Canadian dollar are) closely correlated there, for
sure," said Mazen Issa, senior Canada macro strategist at TD
    At 9:30 a.m. (1430 GMT), the Canadian dollar was at
C$1.1385 to the greenback, or 87.83 U.S. cents, weaker than
Monday's close of C$1.1328, or 88.28 U.S. cents. But it was 
outperforming many other major currencies.
    Mazen said the Canadian dollar could also be reacting to
some of the expectations surrounding Wednesday's Bank of Canada 
policy statement.
    "The emerging view is that you've had strong data growth and
inflation numbers, but the plunge in oil prices kind of gives a
bit of an out, if you will, for the (Bank of Canada) governor to
signal some cautiousness," said Issa, adding that TD believes
the central bank could end up offering a more balanced view than
some people expect.
    "If they are a little bit more balanced tomorrow than people
may be expecting, then you could see a little bit more of a
stronger CAD against the U.S. dollar."
    Canadian government bond prices were mixed across the
maturity curve, with T-bills higher and longer-dated maturities
slipping. The two-year bond was flat, with a yield of
0.991 percent and the benchmark 10-year bond was up
16 Canadian cents to yield 1.915 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)