CANADA FX DEBT-C$ weakens as oil price falls

* Canadian dollar at C$1.3273, or 75.34 U.S. cents
    * Bond prices flat to higher across the maturity curve

    TORONTO, Sept 11 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as the price of oil fell
after Goldman Sachs cut its crude forecast, but trading in the
currency will likely be muted ahead of next week's U.S. Federal
reserve rate decision.
    The currency is heading for a flat week, with a Bank of
Canada policy update on Wednesday providing little direction. 
    The conviction among Wall Street banks that the Fed will
hike rates next week has decreased notably in the last month due
to volatility in global markets. 
    That has in turn limited weakness in the Canadian dollar,
which has lost 10 Canadian cents of value since mid-June.
    * At 8:31 a.m. ET (1231 GMT), the Canadian dollar 
was trading at C$1.3273 to the greenback, or 75.34 U.S. cents,
weaker than the Bank of Canada's official Thursday close of
C$1.3228, or 75.60 U.S. cents.
    * The currency's strongest level of the session was
C$1.3216, while its weakest level was C$1.3275.
    * U.S. crude prices were down 2.70 percent to $44.68,
while Brent crude lost 2.29 percent to $47.77. 
    * The Canadian dollar, which was underperforming most of its
key currency counterparts, is unlikely to push outside of its
recent C$1.3150 to C$1.33 range ahead of next week's Fed
decision, according to several currency strategists.
    * Canadian government bond prices were flat to somewhat
higher across the maturity curve, with the two-year 
price unchanged to yield 0.463 percent and the benchmark 10-year
 rising 10 Canadian cents to yield 1.483 percent.
    * The Canada-U.S. two-year bond spread was -26.7 basis
points, while the 10-year spread was -70.4 basis points.

 (Reporting by Alastair Sharp Editing by W Simon)