(Adds portfolio manager and analyst quotes and details on Bank of Canada governor's comments, updates prices) * Canadian dollar at C$1.3386, or 74.70 U.S. cents * Loonie touches weakest level since March 16 at C$1.3398 * Bond prices lower across yield curve By Fergal Smith TORONTO, Oct 24 (Reuters) - The Canadian dollar weakened to a fresh seven-month low against its U.S. counterpart on Monday, before rallying after the Bank of Canada's official close as comments by the central bank's governor tempered expectations for interest rate cuts.
The decision on whether to cut rates again is not one to take lightly, said Bank of Canada Governor Stephen Poloz, who was taking questions from lawmakers.
A wait-and-see approach from the central bank has left the market scaling back expectations for rate cuts, said Jack Spitz, managing director of foreign exchange at National Bank Financial.
The loonie has been on the backfoot since the Bank of Canada acknowledged last week that it had considered cutting interest rates at its policy meeting.
The combination of a more dovish Bank of Canada and an expected Federal Reserve interest rate hike in December does not bode well for the Canadian dollar, said Hosen Marjaee, senior managing director, Canadian fixed income at Manulife Asset Management.
U.S. crude oil futures settled 33 cents lower at $50.52 a barrel, pressured by news of the impending restart of Britain's Buzzard oilfield.
The Canadian dollar ended at C$1.3386 to the greenback, or 74.70 U.S. cents, weaker than Friday's official close of C$1.3327, or 75.04 U.S.
The currency's strongest level of the session was C$1.3324, while it touched its weakest point since March 16 at C$1.3398.
After the official close, the loonie touched C$1.3286 at its strongest.
The value of Canadian wholesale trade rose 0.8 percent in August, the fifth consecutive monthly gain. The increase exceeded the 0.6 percent month-on-month advance predicted by analysts in a Reuters poll.
The Bank of Canada renewed its inflation target at 2 percent and said it will change the way it measures inflation in order to better gauge long-term trends, a shift which some analysts said could make it harder to predict the central bank's policy changes.
"To have more information on the inflation (rate) is good ... at the same time the market place wants to know what is the Bank (of Canada) going to use in order to adjust monetary stimulus up or down. So we need to get clarification on that," Marjaee said.
Canadian government bond prices were lower across the maturity curve, with the two-year price down 7.5 Canadian cents to yield 0.56 percent and the benchmark 10-year falling 30 Canadian cents to yield 1.163 percent.
(Reporting by Fergal Smith; Editing by Paul Simao and Sandra Maler)