CANADA FX DEBT-Canadian dollar hits one-week high after inflation data
* Canadian dollar at C$1.0736, or 93.14 U.S. cents * Bond prices lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, July 18 (Reuters) - The Canadian dollar touched a one-week high as it rose against the greenback on Friday after data showed Canada's annual inflation rate hit a 28-month peak in June. More broadly, global markets regained their footing following Thursday's rush to safe-haven assets. Investors, however, were still keeping a close eye on geopolitical events after a Malaysian airliner was downed near the Ukraine-Russia border on Thursday and Israel stepped up a ground assault against Gaza militants. Focus in Canada was on the Friday data that showed the annual inflation rate rose 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 in the consumer price index is temporary and that an interest-rate cut remains just as likely as a rate rise. "Certainly the inflation print we had today didn't help the Bank of Canada's cause," said Bipan Rai, director of foreign exchange strategy at CIBC World Markets in Toronto. "But at the same time, there's a lot of transitory effects within today's print that could, in a round about way, benefit what the Bank of Canada is saying." The Canadian dollar ended the North American session at C$1.0736 to the greenback, or 93.14 U.S. cents, stronger than Thursday's close of C$1.0758, or 92.95 U.S. cents. It hit a session high of 1.0708 shortly after the inflation data was released. The Canadian dollar rallied 1.6 percent through June but lost momentum last week after a disappointing jobs report. The currency was flat for this week. After its recent runup, many analysts think the loonie is likely to weaken from here on. "Investors that are looking for the loonie to weaken, a lot of it is going to come from the U.S. dollar leg of it now," Rai said. Bank of Canada Governor Stephen Poloz's message that a weaker loonie would push export growth has lost a lot of the market impact that it had late last year, he added. Canadian government bond prices were lower across the maturity curve, with the two-year off 4 Canadian cents to yield 1.080 percent. The benchmark 10-year was down 22 Canadian cents to yield 2.163 percent. (Editing by Peter Galloway)
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