CANADA FX DEBT-C$ hits C$1.12 on disappointing economic data
* Canadian dollar at C$1.12 or 89.29 U.S. cents * Bond prices mostly lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Sept 30 (Reuters) - The Canadian dollar weakened to a more than six-month low against the greenback on Tuesday, 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 4.7 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 ended the North American session at C$1.12 to the greenback, or 89.29 U.S. cents, weaker than Monday's close of C$1.1153, or 89.66 U.S. cents. The loonie hit a session low of C$1.1219, its lowest since late March. Breaking through that level could prompt markets to try to test the low for the year so far at C$1.1279, which was hit in March, said Ken Wills, currency strategist and broker at CanadianForex in Toronto. Still, the coming quarter could provide an opportunity for a bit of a pullback, Wills said. "I wouldn't be surprised if we come back to C$1.10 or the high C$1.09s throughout the quarter, but I'd say in the near term, my gut would be looking at October we're probably going to see that C$1.1279." Canadian government bond prices were mostly lower across the maturity curve, with the two-year off 1-1/2 Canadian cent to yield 1.127 percent and the benchmark 10-year down 26 Canadian cents to yield 2.154 percent. (Editing by James Dalgleish)
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