* C$ at C$1.0325 vs US$ or 96.85 U.S. cents
* U.S. dollar hit by Summers exit from race to lead Fed
* Canadian bond prices mixed
By Alastair Sharp
TORONTO, Sept 16 (Reuters) - The Canadian dollar ended
stronger against its U.S. counterpart on Monday and touched a
one-month high during the session after former U.S. Treasury
Secretary Lawrence Summers withdrew from the race to head up the
U.S. central bank.
The announcement over the weekend took the U.S. dollar
broadly lower as investors perceived the U.S. Federal Reserve
would take a more gradual path to tightening monetary policy
with Summers out of the picture.
"Market perception, rightly or wrongly, was that Summers
would be more hawkish than (current Chairman Ben) Bernanke or
(leading contender Janet) Yellen or other possible candidates,"
said Don Mikolich, executive director of foreign exchange sales
at CIBC World Markets.
"The prospect of having more stimulus for longer is more
likely without him in the race," he said.
The question of when the Fed will start to pull back on its
economic stimulus program will be the focus of its two-day
policy meeting, which ends on Wednesday. Investors expect the
Fed will reduce its $85 billion a month in bond purchases by $10
billion a month.
The Canadian dollar ended the day at C$1.0325 to
the U.S. dollar, or 96.85 U.S. cents, stronger than Friday's
session close of C$1.0347, or 96.65 U.S. cents.
The currency hit its strongest level since Aug. 12 during
the session before paring gains.
CIBC's Mikolich said that C$1.0280 level could prove
difficult to push through in the near term.
The greenback was 0.2 percent lower against a basket of
currencies on Monday.
The Canadian dollar barely reacted to data that showed
foreigners resumed buying Canadian securities in July after a
huge divestment in June.
Data released last week that showed the ratio of household
debt to income in Canada hit a record high in the second quarter
could be a long-term positive for the loonie if it prompts a
tightening of Bank of Canada policy, said Camilla Sutton, chief
currency strategist at Scotiabank.
"This reopens the risk that the Bank of Canada turns to a
more hawkish stance," she said.
The ratio of household debt to income rose to 163.4 percent
in the second quarter from 162.1 percent in the first quarter.
Prices for Canadian government bonds were mixed across the
maturity curve, with the two-year bond up 2-1/2
Canadian cents to yield 1.269 percent, and the benchmark 10-year
bond falling 22 Canadian cents to yield 2.794
percent.