CANADA FX DEBT-C$ makes small gain as oil bounce fades, Fed eyed

(Adds analyst comment, updates prices to close)
    * Canadian dollar at C$1.3207, or 75.72 U.S. cents
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, Sept 19 (Reuters) - The Canadian dollar made a
slight gain against its U.S. counterpart on Monday, paring a
bigger boost as an oil-induced bounce faded and traders took a
cautious approach to pending Japanese and U.S. central bank
monetary policy decisions. 
    The loonie, as Canada's currency is known, had bounced from
a seven-week low hit on Friday as oil prices rebounded. But it 
lost momentum with oil settling off its highs on skepticism over
Venezuela's bid to talk up a potential OPEC output freeze and on
indications U.S. crude stockpiles rose last week. 
    Currency strategists are bracing for interest rate decisions
from both the Bank of Japan and the U.S. Federal Reserve on
    "We've got a bigger probability of seeing a shock that sends
the U.S. dollar higher across the board as opposed to one that
has the U.S. dollar weaken," said Scott Smith, a senior market
analyst at Cambridge Global Payments.
    He put the chance the Fed hikes at 50 percent, much higher
than the market is pricing in, given recent hawkish comments
from the Fed's most influential policymakers. He added that even
in the case of a hold, the U.S. dollar could rally if another
dissenter appears or the central bank gives a brighter economic
    The Canadian dollar settled at C$1.3207 to the
greenback, or 75.72 U.S. cents, slightly stronger than Friday's
close of C$1.3214, or 75.68 U.S. cents.
    The currency's strongest level of the session was C$1.3135,
while its weakest was C$1.3230.    
    Speculators pared bullish bets on the Canadian dollar for
the second straight week, Commodity Futures Trading Commission
data showed on Friday. 
    Canadian government bond prices were lower across the yield
curve, with the two-year bond down half a Canadian
cent to yield 0.584 percent and the benchmark 10-year
 losing 3 Canadian cents to yield 1.193 percent.
    Bank of Canada Governor Stephen Poloz will give a speech in
Quebec City on Tuesday on the topic of "Living With Lower for
Longer," followed by a press conference. Investors will be
looking to see whether Poloz emphasizes the downbeat tone of the
bank's most recent policy statement.
    Canadian inflation and retail sales data are due on Friday.
The annual inflation rate is forecast to have edged up to 1.4
percent in August, while investors will be looking for signs
that the federal government's new child benefit checks gave a
boost to retail sales. 

 (Additional reporting by Fergal Smith; Editing by W Simon and
Dan Grebler)