CANADA FX DEBT-C$ strengthens as Fed minutes sideswipe U.S. dollar

* Canadian dollar at C$1.1104, or 90.06 U.S. cents
    * U.S. dollar weakens on dovish Fed minutes
    * Bond prices mostly higher across the maturity curve

 (Updates to close)
    By Andrea Hopkins
    TORONTO, Oct 8 (Reuters) - The Canadian dollar strengthened
nearly 1 percent against the U.S. dollar on Wednesday after
minutes of the latest Federal Reserve policy meeting focused on
the downside risks to the U.S. economy. 
    The U.S. dollar lost ground against the Canadian currency,
fell to a two-week low against the euro and trimmed gains
versus the yen following the release of the dovish Fed
    "We had our big rally today, we started quite weak and now
we've rallied almost a full percent, and that's really just a
reaction to the Fed minutes," said Camilla Sutton, chief
currency strategist at Scotiabank.
    "Traders have used it as a reason for profit taking on long
U.S. dollar positions and the market was already fairly
    In minutes that suggested the U.S. central bank could take
its time in raising interest rates, the Fed said a strong dollar
could hurt some parts of the economy and slow the rise of
    The Canadian dollar ended the North American
session at C$1.1104 to the greenback, or 90.06 U.S. cents, up
from Tuesday's close at C$1.1171, or 89.52 U.S. cents.
    Domestically, Canadian housing starts rose in September,
while the previous month was also revised slightly higher,
according to a report from the Canada Mortgage and Housing Corp.
    Economists said the figures were broadly in line with
forecasts, despite some concerns they could come in below
expectations following Tuesday's disappointing building permits
    Sutton said investors are likely to see a period of
stabilization of the U.S. dollar until it can find a new
catalyst in economic data to give it back some strength.
    "For Canada, we get employment data on Friday, but really
the U.S. data that is going to prove particularly important is
anything that gives us a hint on inflation or employment,"
Sutton said.
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year up 6 Canadian
cents to yield 1.053 percent and the benchmark 10-year
 adding 15 Canadian cents to yield 2.012 percent.

 (Additional reporting by Solarina Ho; Editing by Chizu Nomiyama
and James Dalgleish)