CANADA FX DEBT-C$ ends lower on weak data, bonds gain
* Canadian dollar streak of gains snapped at three days
* Weak data drags C$ from highest level since Nov. 10
* Bond yields hit record lows in face of equity selloff
By Frank Pingue
TORONTO, Dec 18 (Reuters) - The Canadian dollar's three-day streak of gains versus the U.S. dollar ended on Thursday as the latest Canadian data supported calls for more Bank of Canada interest rate cuts and knocked the currency from a near six-week high.
Bond prices were all sent higher and yields fell to record lows as North American equity markets added to their losses and lured investors back into secure government debt.
The Canadian dollar closed at C$1.2077 to the U.S. dollar, or 82.80 U.S. cents, down from C$1.1967 to the U.S. dollar, or 83.56 U.S. cents, at Wednesday's close.
Data released on Thursday showed Canadian retail sales fell by more than expected in October, while the leading indicator had its biggest fall since 1991.
The reports added to a string of weak Canadian data that seems to support a growing chorus of market experts who expect the Bank of Canada to follow last week's 75 basis point interest rate cut with another cut on Jan. 20.
"Consumers are pulling back the reins quite substantially and in light of the fact that we just had a rate cut, it does suggest that we are sort of in for a bumpy ride and the Bank of Canada might not be finished cutting rates," said Charmaine Buskas, senior economics strategist at TD Securities.
"In addition, we are seeing general U.S. dollar improvement simply on safe haven flows, so that also is taking some of the wind out of the Canadian dollar's sails."
Early in the session, the Canadian dollar rallied to C$1.1820 to the U.S. dollar, or 84.60 U.S. cents, its highest level since Nov. 10, due partly to ongoing fallout from the U.S. Federal Reserve rate cut earlier this week.
But the arrival of the Canadian data set off a slide that the currency wasn't able to recover from. It fell as low as C$1.2125 to the U.S. dollar, or 82.47 U.S. cents, late in the session before bouncing back slightly.
A fall in the price of oil, a key Canadian export, also weighed on the currency. Oil prices fell by more than 9 percent as slumping energy demand offset a record output cut announced this week by the Organization of Petroleum Exporting Countries.
BOND PRICES RISE
Canadian bond prices all ended in positive territory given the mix of weak domestic data, a selloff in equity markets and a rally in the bigger U.S. Treasury market that often lends direction to the Canadian market.
Toronto's main stock index, which reopened Thursday after a technical glitch wiped out Wednesday's session, finished 3.4 percent lower for its lowest closing level in a week.
Bond prices could get another boost early on Friday as the key consumer prices report for November is due out and expected to show another drop in prices.
The two-year bond rose 16 Canadian cents to C$102.98 to yield 1.196 percent. The 10-year rallied 65 Canadian cents to C$112.02 to yield 2.793 percent.
The yield spread between the two-year and 10-year bond was at 184 basis points, up from 175 basis points at the previous close.
The 30-year bond jumped C$1.85 to C$127.85 to yield 3.454 percent. In the United States, the 30-year Treasury yielded 2.532 percent. (Editing by Peter Galloway)
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