CORRECTED-CANADA FX DEBT-C$ weakens to 1-1/2-month low, Fed in focus

(Corrects story from Oct 29 to show Bank of Canada said Poloz
was referring to the change in the Canadian dollar, not in
monetary policy when he spoke of "not a very significant
    * C$ at C$1.0470 vs US$, or 95.51 U.S. cents
    * Market sets up for Fed statement on Wednesday
    * Canadian bond prices higher across the curve

    By Leah Schnurr
    TORONTO, Oct 29 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday, extending its recent rout to
hit a fresh 1-1/2-month low, but investors were wary of taking
big bets with the U.S. Federal Reserve's two-day policy meeting
    Markets also digested comments from the head of the Bank of
Canada, who told a parliamentary committee that in setting
interest rates last week the bank heightened its focus on the
fact that inflation has been persistently below its 2 percent
    Governor Stephen Poloz said the Canadian dollar did not
weaken significantly after the central bank dropped any mention
of eventual rate increases from its latest policy statement last
    "He's firmly establishing his neutral position, which is
warranted given where Canada finds itself from an economic
perspective and the uncertainty globally," said Gareth
Sylvester, director at Klarity FX in San Francisco.
    The bank's perceived shift in policy took the Canadian
dollar lower last week as analysts pushed out their expectations
for how long interest rates will stay low. Analysts said the
bank has moved to a more neutral stance from its previous
tightening bias. [CA/POLL
    The Canadian dollar ended the North American
session at C$1.0470 versus the greenback, or 95.51 U.S. cents,
weaker than Monday's close of C$1.0445, or 95.74 U.S. cents.
    The loonie's session low was C$1.0472, its lowest level
since early September.
    The Fed will release a statement on Wednesday at the end of
its meeting, with the market expecting the U.S. central bank to
stand pat with its economic stimulus efforts. 
    The Fed surprised markets in September with its decision to
continue its bond-buying program at a $85 billion a month pace,
rather than trimming the amount. The Canadian dollar touched a
three-month high following that announcement, but has weakened
    "Obviously their communication style has come under some
scrutiny since the decision in September to push off tapering,
so we'll have an opportunity in terms of the statement to get a
little more clarity in terms of what the Fed is really looking
at," said Camilla Sutton, chief currency strategist at
Scotiabank in Toronto.
    Canadian government bond prices were higher across the
maturity curve. The two-year bond rose half a
Canadian cent to yield 1.091 percent, and the benchmark 10-year
bond added 21 Canadian cent to yield 2.406 percent.

 (Editing by Peter Galloway)