CANADA FX DEBT-Canadian dollar hits 10-day low as virus clips global outlook

    (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.6% against the greenback
    * Loonie touches its weakest since Oct. 16 at 1.3225
    * U.S. oil price settles 3.2% lower
    * Canadian bond yields ease across much of a flatter curve

    By Fergal Smith
    TORONTO, Oct 26 (Reuters) - The Canadian dollar weakened by
the most in nearly five weeks against its U.S. counterpart on
Monday, as investors grew more worried about the outlook for the
global economy and eyed a Bank of Canada interest rate decision
this week.
    U.S. stocks tumbled as soaring coronavirus cases and
uncertainty about a fiscal relief bill in Washington dimmed the
outlook for the U.S. economic recovery.
    "The loonie has suffered from the deterioration in the
global economic outlook today," said Simon Harvey, FX market
analyst for Monex Europe and Monex Canada.
    "With Canada's second wave aligning with that in Europe and
the loonie's price action linked with oil market dynamics, the
loonie hasn't found any shelter in today's risk-off selling,"
Harvey said.
    Oil       , one of Canada's major exports, settled 3.2%
lower at $38.56 a barrel, while the safe-haven U.S. dollar
       rose against a basket of major currencies.

    The Canadian dollar        was trading 0.6% lower at 1.3197
to the greenback, or 75.77 U.S. cents, its biggest drop since
Sept. 23. The currency touched its weakest intraday level since
Oct. 16 at 1.3225.
    Speculators have raised their bearish bets on the Canadian
dollar to their highest in seven weeks, data from the U.S.
Commodity Futures Trading Commission showed on Friday.
    The Bank of Canada is due to make an interest rate decision
and update its economic outlook on Wednesday. The central bank
has said it will leave rates at a record low of 0.25% until its
2% inflation target is achieved sustainably, which it does not
expect for at least two years.
    Canadian government bond yields were lower across much of a
flatter curve in sympathy with U.S. Treasuries on Monday. The
10-year yield             fell 1.6 basis points to 0.627%,
extending its pullback from Friday's eight-week high of 0.680%.

 (Reporting by Fergal Smith
Editing by David Goodman and Alison Williams)

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