CANADA FX DEBT-C$ weakens as more pressure seen in 2014

* Canadian dollar at C$1.0668 or 93.74 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Dec 27 (Reuters) - The Canadian dollar weakened
against the greenback on Friday in what could be a choppy
post-holiday session as investors expected the loonie to face
more pressure heading into the new year.
    The loonie was also lower against most other major
currencies. Against the euro, the Canadian dollar hit
a nearly four-year low at C$1.4816 as the euro was pushed higher
by banks shoring up their balance sheets. 
    With no Canadian economic data on tap until the new year and
the U.S. calendar similarly sparse, investors focused on the
longer-term trends for the loonie, said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary.
    "The path of least resistance for the loonie is still
lower," Smith said.
    The Canadian dollar has been bruised in recent months by a
more neutral policy stance from the Bank of Canada that has
markets expecting interest rates will stay low for longer.
    Meanwhile, the U.S. Federal Reserve has begun reducing its
economic stimulus, which should benefit the U.S. dollar.
    "That divergence is going to work in the U.S. dollar's favor
to the detriment of the loonie as we move into 2014," Smith
    The Canadian dollar was at C$1.0668 to the
greenback, or 93.74 U.S. cents, weaker than Thursday's North
American close of C$1.0649, or 93.91 U.S. cents, according to
Reuters data.
    A move in U.S. benchmark Treasury yields to over 3 percent
also added some appeal to the greenback, said Smith.
    While the next couple sessions could be choppy due to month-
and year-end portfolio rebalancing, the loonie is likely to
weaken further in the first half of 2014 before regaining some
strength in the later part of next year, Smith said.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3 Canadian
cents to yield 1.153 percent and the benchmark 10-year
 down 39 Canadian cents to yield 2.767 percent.
    Canadian bond and equity markets were closed on Wednesday
and Thursday for the Christmas and Boxing Day holidays.