* Canadian dollar at C$1.1228 or 89.06 U.S. cents
* Bond prices lower across the maturity curve
By Solarina Ho
TORONTO, Oct 21 (Reuters) - The Canadian dollar strengthened
against the U.S. dollar and outperformed other major currencies
on Tuesday after last week's volatility, while investor focus
shifted to Wednesday's monetary policy statement by the Bank of
Canada.
Analysts said a return of risk appetite to global markets
after last week's rout on concerns about the world economy
helped bolster the Canadian currency.
"Over the past couple of weeks, (the Canadian dollar) saw a
pretty notable depreciation and I think this is just a bit of a
retracement," said Greg Moore, senior currency strategist, at
RBC Capital Markets.
The Bank of Canada is widely expected to hold its key
interest rate at 1 percent, where it has been for four years.
"I'd say neutral with a dovish slant is essentially what we
continue to expect from the Bank of Canada," said Moore, noting
they've been emphasizing some of the more dovish scenarios in
recent speeches. "It's the same sort of message they've been
pushing for a little over a year."
Moore said it was not entirely clear how the Bank of Canada
will interpret the impact of the major drop in oil prices on the
economy and noted it will also be the first major central bank
to have a meeting since last week's market volatility.
The Canadian dollar closed at C$1.1228 to the
greenback, or 89.06 U.S. cents, up from Monday's close of
C$1.1284, or 88.62 U.S. cents.
The currency was helped earlier in the session by Chinese
data, which showed China's economy grew by a
stronger-than-expected 7.3 percent in the third quarter. It was
still the slowest pace since the global financial crisis,
however.
The loonie is often sensitive to economic news out of China,
which is a major consumer of commodities, including oil.
"The slight surprise to the upside has helped to put a bid
under risk assets and the commodity-correlated currency space,"
said Scott Smith, senior market analyst at Cambridge Mercantile
Group in Calgary.
Canadian government bond prices were lower across the
maturity curve, with the two-year down 2 Canadian
cents to yield 0.975 percent and the benchmark 10-year
down 25 Canadian cents to yield 1.965 percent.
(Additional reporting by Leah Schnurr; Editing by Meredith
Mazzilli and Diane Craft)