CANADA FX DEBT-C$ eases as inflation data lifts U.S. currency
* Canadian dollar closes at C$1.0864 or 92.05 U.S. cents * Bond prices lower across the maturity curve (Adds analyst's comments and updates figures) By Cameron French TORONTO, June 17 (Reuters) - The Canadian dollar slipped against the U.S. currency on Tuesday as stronger-than-expected U.S. inflation figures raised the specter that the U.S. Federal Reserve might raise interest rates sooner than anticipated, while some traders sat on their hands ahead of key domestic data due at the end of the week. U.S. consumer prices recorded their largest gain in more than a year in May, pointing to a firming of inflation pressures just as the Fed begins a two-day policy meeting. "We're not seeing high trading volumes and just a slightly higher upward ebb in USD/CAD, which is the result of the inflation data out of the U.S. this morning," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary. The Canadian dollar ended the North American session at C$1.0864 to the U.S. dollar, or 92.05 U.S. cents, down from Monday's close of C$1.0841 to the U.S. dollar, or 92.24 U.S. cents. Canadian inflation and retail sales data due on Friday could sharpen the picture on the Canadian interest rate outlook. With upward inflation pressure so far absent in Canada, investors currently do not expect a rate hike until well into 2015. "There's the potential if we get an upside surprise with inflation on Friday and some more optimistic data points out of Canada over the next several weeks, we could see a break of the C$1.08 (92.59 U.S. cent) level, but I think that's going to hold up pretty well," Smith said. Canadian government bond prices were lower across the maturity curve, with the two-year down 2.7 Canadian cents to yield 1.114 percent and the benchmark 10-year down 20 Canadian cents to yield 2.314 percent. (Reporting by Cameron French; Editing by Peter Galloway)
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