CANADA FX DEBT-C$ flat as inflation offsets retail sales data
* Canadian dollar at C$1.0945 or 91.37 U.S. cents * Bond prices higher across the maturity curve By Leah Schnurr TORONTO, Aug 22 (Reuters) - The Canadian dollar was flat against the greenback on Friday as a surprisingly strong domestic retail sales report was tempered by separate data that showed a softer-than-expected annual inflation rate. While the two reports were the main domestic event following a dearth of economic data this week, investors were also turning their attention to a speech from Federal Reserve Chair Janet Yellen expected later in the morning. Canada's annual inflation rate slipped to 2.1 percent in July, while retail sales rose 1.1 percent in June, making for the sixth straight month of gains. Even with the decline, the inflation rate remained above the Bank of Canada's 2 percent target. With the central bank concerned about the downside risks to inflation, the report is closely watched by investors trying to glean the future path of monetary policy. The loonie hit a session low at C$1.0982 immediately following the pair of reports but was able to claw back those losses. "It'll be interesting to see which one prevails, I'd lean toward the retail sales numbers," said Paul Ferley, assistant chief economist at Royal Bank of Canada in Toronto. "Despite the disappointment in inflation, it still remains pretty close to the Bank of Canada's mid-range target, whereas the growth numbers are pointing to a recovery from the weakness at the start of the year." The Canadian dollar was at C$1.0945 to the greenback, or 91.37 U.S. cents, unchanged from Thursday's close. The currency pairing could see some choppiness as markets were positioning ahead of the speech from Yellen, due at 10:00 am EDT (1400 GMT). The Fed chair will be speaking on labor markets at the annual gathering of policymakers and economists in Jackson Hole, Wyoming. Canadian government bond prices were higher across the maturity curve, with the two-year edging up 0.2 Canadian cents to yield 1.088 percent and the benchmark 10-year up 10 Canadian cents to yield 2.074 percent. (Reporting by Leah Schnurr; Editing by Meredith Mazzilli)
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