CANADA FX DEBT-C$ retreats after unexpected fall in Canadian retail sales

* Canadian dollar at C$1.2276 or 81.46 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, June 19 (Reuters) - The Canadian dollar weakened
against the greenback on Friday, hurt by data that showed an
unexpected fall in retail sales in April.
    After two months of gains, retail sales fell 0.1 percent in
April as consumers spent less at food and electronic stores.
Economists had forecast a 0.7 percent rise from March. Sales in
March were revised higher to a 0.9 percent rise from a 0.7
percent increase. 
    The disappointing retail figures overshadowed a report that
showed a slight uptick in Canada's annual inflation rate for
May, which came in at 0.9 percent, but still far below the Bank
of Canada's target range of 1 percent to 3 percent. Forecasters
had expected the rate to stay at 0.8 percent.
    "When you take that in conjunction with some of the other
data that we've seen this month in terms of manufacturing sales,
goods trade data, the growth outlook for April doesn't look too
supportive," said Bipan Rai, director of foreign exchange
strategy at CIBC World Markets. Rai added, however, that the
recent data was unlikely to prod the Bank of Canada to make a
quick move on interest rates.
    At 9:28 a.m. EDT (1328 GMT), the Canadian dollar 
was at C$1.2276 to the greenback, or 81.46 U.S. cents, weaker
than the Bank of Canada's official close on Thursday of
C$1.2227, or 81.79 U.S. cents. At one point the currency hit
C$1.2296, 81.33 U.S. cents.
    The loonie was already under some pressure before the retail
sales figures were released, in part due to softer prices for
crude oil, a key Canadian export. Oil slid on forecasts that
U.S. shale oil output would keep growing this year.
    The U.S. crude price was down 1.80 percent at $59.36,
while Brent crude lost 1.85 percent to $63.07. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 5 Canadian cents
to yield 0.597 percent, and the benchmark 10-year 
rising 52 Canadian cents to yield 1.738 percent.
    The Canada-U.S. two-year bond spread was -2.8 basis points,
while the 10-year spread was -55.2 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway)