CANADA FX DEBT-C$ hits one-week high on Fed, commodities

* U.S. dollar weakness supports C$ rise

* Commodity prices help power rally

* Bonds end lower across the curve
(Recasts)

By Frank Pingue

TORONTO, Nov 4 (Reuters) - Canada's dollar hit its highest
level in more than a week on Wednesday after comments from the
U.S. Federal Reserve shook the greenback, while rising
commodity prices supported its climb.

It was the third straight higher close for the Canadian
dollar after a slump pushed it to its lowest level in a month
early on Monday before it began its rebound.

The currency rose as high as C$1.0592 to the U.S. dollar,
or 94.41 U.S. cents, as the U.S. dollar buckled after the Fed
left interest rates steady, as expected, and said it intends to
keep them low for an extended period. [ID:nN04453484]

That was the Canadian dollar's highest level since Oct. 26.
But it had already been cruising along in the session,
supported by record high gold prices and oil that topped $80 a
barrel. Oil and gold are key Canadian exports and their prices
often influence moves in the currency.

"What we've seen in the last couple of days is that the
risk aversion that we saw late last week has moved very quickly
once again to the background," said Camilla Sutton, currency
strategist at Scotia Capital. "So we've seen most commodity
currencies outperform just on the outlook for global growth."

The Canadian dollar closed at C$1.0638 to the U.S. dollar,
or 94.00 U.S. cents, up from C$1.0682 to the U.S. dollar, or
93.62 U.S. cents, at Tuesday's close.

Earlier in the session, Bank of Canada Deputy Governor John
Murray said the strong Canadian dollar would probably offset
positive economic developments since July and that the bank
could expand the money supply if needed. [ID:nN0410602]

The remarks did not have any noticeable impact on the
Canadian dollar as traders opted to hold off on making any
major commitments until after the Fed decision.

"Eventually the market is going to start challenging the
Bank of Canada on its comments as far as what they'll use as
tools to step in to defend (against) the strength in the
Canadian dollar. So far all they're doing is intervening by
their comments," said C.J. Gavsie, managing director of foreign
exchange sales at BMO Capital Markets.

One of the next key events likely to offer direction for
the currency is Canadian employment data on Friday, which is
expected to show the economy added 10,000 jobs in October,
although the U.S. nonfarm payrolls data due the same morning
may also have an influence.

BOND PRICES SLIP

Canadian bond prices ended lower across the curve alongside
a similar move in the U.S. Treasury market due to worries over
massive amounts of pending U.S. government debt supply.

With the Fed statement out of the way, investors turned
their attention back to the pending sale of $81 billion in
notes and bonds next week in the United States. Investors often
move to cheapen Treasuries ahead of such auctions.

The two-year bond CA2YT=RR slipped 2 Canadian cents to
C$99.68 to yield 1.408 percent, while the 10-year bond
CA10YT=RR fell 55 Canadian cents to C$102.00 to yield 3.501
percent.
(Editing by Peter Galloway)