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CANADA FX DEBT-C$ weakens vs US$ on hopes of U.S. debt resolution

* C$ at C$1.0366 vs US$, or 96.47 U.S. cents

* C$ weakens to multi-month lows against Aussie and New

Zealand dollars

* Bond prices mostly lower across curve

By Solarina Ho

TORONTO, Oct 15 (Reuters) - The Canadian dollar was weaker

on Tuesday against its U.S. counterpart, which rose to a

one-month high against a basket of currencies on hopes that

Washington lawmakers are close to finalizing an agreement that

would end a government shutdown and avert a default on U.S.


Expectations were heightened after Senate Majority Leader

Harry Reid, a Democrat, and his Republican counterpart, Mitch

McConnell, wrapped up lengthy deal talks on Monday and expressed


The Treasury Department estimates that the government will

reach a $16.7 trillion borrowing limit on Thursday, Oct 17.

"Optimism that's coming out through Washington at least for

an increased prospects for a deal seems to be providing a bid to

the U.S. dollar," said Mazen Issa, macro strategist At TD


"Just looking at across the major currency baskets as well,

(the U.S. dollar) is generally stronger against the G10."

The Canadian dollar was at C$1.0366 versus the

greenback, or 96.47 U.S. cents at 9:58 a.m. (1501 GMT), softer

than Monday's Thanksgiving holiday close at C$1.0349, or 96.63

U.S. cents.

The Canadian dollar's performance was mixed against other

key currencies, but weakened to multi-month lows against its

commodities sister currencies. It hit its weakest level against

the Australian dollar since early June and its weakest

level against the New Zealand dollar since late


Domestically, data from the Canadian Real Estate Association

showed sales of existing homes in Canada edged up in September

and surged from a year earlier.

Figures from the Teranet-National Bank Composite House Price

Index showed Canadian home prices were unchanged in September

after hitting a record high the month before, suggesting the

housing market is cooling.

Government bond prices were mostly lower across the maturity

curve, with the two year bond off 3 Canadian cents to

yield of 1.226 percent and the benchmark 10-year bond

falling 26 Canadian cents to yield 2.625 percent.