* C$ at 95.69 U.S. cents early on Friday
* Concerns over U.S. recovery hurting commodity currencies
* Bonds flat to slightly higher
By John McCrank
TORONTO, July 16 (Reuters) - Canada's dollar fell against its U.S. counterpart on Friday, as growing concerns about the strength of the U.S. economic recovery and the pace of growth in China dampened demand for commodity-based currencies.
Canada is a major exporter of commodities like oil, natural gas, copper, and gold, and about three-quarters of the country's exports are absorbed by the United States.
Recent U.S. economic data has come in weaker than market forecasters predicted and that has led to concern that the health of the world's No. 1 economy is a little weaker than recently thought.
"All of the commodity currencies have weakened off in the last 12 hours on general fears about a deterioration in the U.S. economic outlook," said Camilla Sutton, a currency strategist at Scotia Capital.
She said data out of China on Thursday also prompted concerns among market players that growth there, while strong, was not as robust as expected.
At 8:05 a.m. (1205 GMT), the Canadian dollar CAD=D4 was at C$1.0450 to the U.S. dollar, or 95.69 U.S. cents, down from Thursday's close at C$1.0388 to the U.S. dollar, or 96.26 U.S. cents.
In the overnight session, the currency hit a low of 1.0467, or 95.54 U.S. cents, its lowest level since July 8.
The softness came despite a weaker greenback, which slumped to a two-month low against the euro and a broader basket of currencies. [ID:nLDE66F0RS]
Most commodities are priced in U.S. dollars and a weaker greenback makes it cheaper for holders of other currencies to buy them. But the price of oil, while up about a dime, remained under the $77 a barrel mark. [O/R]
Gold was down at around $1205 an ounce as demand was seen flagging, and copper prices eased as well. [ID:nLDE66F0VL] [ID:nLDE66F0S2]
The next big Canadian focused event that could impact the value of the Canadian dollar will the the Bank of Canada's interest rate decision on Tuesday and market expectations are leaning toward an increase in the bank's key rate. BOCWATCH
Generally, that would stoke demand for the currency due to the higher returns it would generate, but that may not be the case this time, said Sutton.
"Increasingly it's expected that even though they'll hike interest rates, the statement itself may be more dovish than the previous one, which could keep this downward pressure on Canada even into the interest rate hike," she said.
Canadian primary dealers and global forecasters surveyed by Reuters expect the bank will raise its key overnight interest rate next week by 25 basis points to 0.75 percent, though the pace of subsequent hikes is less clear. [CA/POLL]
Canadian government bond prices were tracking U.S. Treasuries and were flat to slightly higher after rallying on Thursday on a safe haven bid.
Stock futures in the U.S. were higher on Friday as investors looked to equities after quarterly profits from General Electric Co and Bank of America Corp topped estimates.
On the U.S. data front, investors will be watching for the latest inflation numbers.
"That will be very important, particularly with rising fears of deflation," said Sutton.
Canada's two-year bond CA2YT=RR was up 1 Canadian cent to yield 1.654 percent, while the 10-year bond CA10YT=RR added 5 Canadian cents to yield 3.231 percent. (Reporting by John McCrank, Editing by Chizu Nomiyama)