CANADA FX DEBT-C$ briefly breaks C$1.12 on disappointing data
* Canadian dollar at C$1.1179 or 89.45 U.S. cents * Bond prices mostly lower across the maturity curve By Leah Schnurr TORONTO, Sept 30 (Reuters) - The Canadian dollar weakened to a more than six-month low against the greenback on Tuesday, briefly piercing resistance at C$1.12 after data showed growth in Canada's economy stalled in July. The loonie is down nearly 3 percent for the month, putting it on track for its worst month since January when it was caught in a sharp selloff. For the quarter, the currency has fared even worse and is down 4.6 percent, the biggest decline since the third quarter of 2011. A big driver behind the loonie's decline over the last three months has been broad-based buying of the U.S. dollar as the economy south of the border has picked up and the Federal Reserve moves closer to ending its extraordinary stimulus. At the same time, there has been the growing view that the Bank of Canada will stay on the sidelines longer than the Fed as economic growth in Canada has been lackluster. Further evidence of a sluggish economy was Tuesday's catalyst for a weaker loonie after data showed Canada's economy did not expand in July. "With a bare (economic) calendar, a lot of things were riding on this number in terms of whether we confirm that we're moving higher or if we have a bit of a pullback," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. "It's another question mark about the strength of the recovery here." The Canadian dollar was at C$1.1179 to the greenback, or 89.45 U.S. cents, weaker than Monday's close of C$1.1153, or 89.66 U.S. cents. The loonie high a session low of C$1.1205, its lowest level since late March. With the currency breaking through that threshold, it could open up some room to the C$1.1250 level, although the loonie could run out of steam beyond C$1.12 depending on the data, said Mikolich. Investors were also taking in a separate report that showed producer prices edged up 0.2 percent in August. The domestic economic calendar is light through the rest of the week until trade balance figures due on Friday. Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 1.1 Canadian cents to yield 1.125 percent and the benchmark 10-year down 15 Canadian cents to yield 2.142 percent. (Editing by Nick Zieminski)
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