CANADA FX DEBT-Loonie pulled lower as oil price drops

* Canadian dollar at C$1.1637 or 85.93 U.S. cents
    * Bond prices mostly higher across the maturity curve

 (Adds quotes, updates prices)
    By Leah Schnurr
    OTTAWA, Dec 22 (Reuters) - A drop in oil prices pulled the
Canadian dollar lower against the greenback on Monday but the
loonie was not expected to fall out of its recent trading range
during this holiday-shortened week.
    The Canadian dollar has been hit hard in recent months by
the plunge in oil prices and is down 8.7 percent for the year,
putting it on track for its weakest year since 2008. 
    Oil, which is a major export for Canada, settled down $1.87
at $55.26 a barrel after Saudi Arabia's oil minister said
OPEC would not cut production at any price. 
    "In the short term, the trend is not the friend for the
loonie," said Rahim Madhavji, president at
in Toronto. 
    "It's obviously facing a lot of headwinds with oil prices
and we still don't know how that's going to trickle down into
the economy and potentially other sectors that are really
leveraged to oil."
    The Canadian dollar ended the North American
session at C$1.1637 to the greenback, or 85.93 U.S. cents,
weaker than Friday's close of C$1.1608, or 86.15 U.S. cents.
    Canada's gross domestic product report for October on
Tuesday is the only major economic data on tap this week, and
the loonie is likely to be capped at the high C$1.15s unless the
GDP figures surprise the market, said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    Economic growth is forecast to have edged up 0.1 percent in
October, slower than the 0.4 percent pace the month before.
    Analysts see the Canadian dollar's weakness continuing into
2015 even if oil prices recover. They say the currency also
could be pressured by a hike in U.S. interest rates, which is
expected to come next year and will most likely be implemented
before any move on rates by the Bank of Canada.
    "With the Federal Reserve warning of a possible rate hike as
early as April of next year, we're likely to see U.S.
dollar-Canadian dollar trend higher," Smith said.
    Canadian government bond prices were mostly higher across
the maturity curve, though the two-year was off 3
Canadian cents to yield 1.026 percent. The benchmark 10-year
 was up 11 Canadian cents to yield 1.801 percent.

 (Editing by Peter Galloway)