CANADA FX DEBT-Canadian dollar hits one-week high after inflation data
* Canadian dollar at C$1.0732, or 93.18 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, July 18 (Reuters) - The Canadian dollar firmed to a one-week high against the greenback on Friday after data showed Canada's annual inflation rate rose to a 28-month high in June. The strength in the loonie bucked the more cautious trend in global markets after a Malaysian airliner was downed near the Ukraine-Russia border and Israel stepped up a ground assault against Gaza militants. But the focus in Canada was on a rise in the annual inflation rate to 2.4 percent last month, which exceeded expectations, as well as the Bank of Canada's 2 percent target. The central bank, which has long been concerned about the risks of low inflation, said earlier this week the recent surge was temporary. "The key take-away here is that the Bank of Canada spent a lot of time this week to reinforce the transitory nature of inflation to downplay the recent strength in inflation and here we are with inflation a little bit stronger than expected," said Mazen Issa, senior Canada macro strategist at TD Securities in Toronto. "This is going to be a key theme as we move forward and whether or not the Bank of Canada's rhetoric is vindicated within the actual data." The Canadian dollar was at C$1.0732 to the greenback, or 93.18 U.S. cents, above Thursday's close of C$1.0758, or 92.95 U.S. cents. It hit a session high of 1.0708 shortly after the data was released. Investors also took in a separate report that showed wholesale sales jumped far more than expected in May. The Canadian dollar rallied 1.6 percent through June but lost momentum last week after a disappointing jobs report. The currency is nearly flat for the week, up just 0.02 percent. Canadian government bond prices were lower across the maturity curve, with the two-year off 3-1/2 Canadian cents to yield 1.077 percent. The benchmark 10-year was down 16 Canadian cents to yield 2.156 percent. (Reporting by Leah Schnurr; Editing by Paul Simao)
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