CANADA FX DEBT-Loonie rises after Poloz comments that monetary conditions appropriate

Kate Duguid


* Canadian dollar at C$1.327 per USD

* Canadian government bond yields higher across maturities

NEW YORK, Nov 21 (Reuters) - The Canadian dollar strengthened on Thursday, coming off six-week lows against its U.S. counterpart after Bank of Canada Governor Stephen Poloz said he believed current monetary conditions were appropriate. In remarks at a fireside chat organized by the Ontario Securities Commission in Toronto, the central banker said he thought the central bank's policy fit the country's economic situation. Poloz's remarks come after BoC Senior Deputy Governor Carolyn Wilkins on Tuesday said the global economy was facing immense challenges that could spill over into Canada and that the central bank had room to move interest rates lower. Currency markets reacted by pushing the loonie to six-week lows in the days following.

The Canadian dollar was at C$1.327 to the greenback,

0.26% stronger than Wednesday's close at C$1.330. But trading was range bound, with the loonie still about half a percent off of where it had opened Tuesday prior to Wilkins' comments. Canada's central bank shifted to a more dovish stance in October as it cut its economic growth forecasts and expressed concern about global trade risks. China will strive to reach an initial trade agreement with the United States as both sides keep communication channels open, the Chinese commerce ministry said on Thursday, in an attempt to allay fears talks might be unraveling. Reports on Wednesday that the two countries were unlikely to reach a "phase one" trade deal by the end of the year had

spurred a risk-off trade, bolstering the Japanese yen ,the Swiss franc and hitting U.S. equities and Treasury

yields. By Thursday, some of those moves had reversed. On Thursday morning, money markets were estimating an 11.61% chance of a rate cut at the Bank of Canada's next policy meeting on Dec. 4. Estimates on Wednesday were at approximately 20%. Canadian government bond yields were higher across

maturities with the two-year yield up 3.5 basispoints to 1.550% and the benchmark 10-year yield up

3.6 basis points to 1.468%.

(Reporting by Kate Duguid; Editing by Bernadette Baum)