CANADA FX DEBT-C$ weakens ahead of expected soft data as oil falls

(Adds analyst comments and details on NAFTA and Keystone XL;
updates prices)
    * Canadian dollar ends at C$1.3407, or 74.59 U.S. cents
    * Bond prices mixed across the yield curve

    By Fergal Smith
    TORONTO, Dec 21 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday, paring most of the
previous day's gains, as oil prices fell and investors braced
for weak domestic economic data.    
    Reports on Canadian inflation for November and retail sales
for October are due on Thursday. 
    The loonie lost ground "ahead of what is expected to be soft
numbers," with a lack of liquidity in pre-Christmas trading
adding to pressure on the currency, said Jack Spitz, managing
director of foreign exchange at National Bank Financial.
    Economists forecast that total annual inflation will slip to
1.4 percent, while retail sales are expected to rise 0.2 percent
after the previous month's 0.6 percent gain, in line with
expectations that broader economic growth slowed in the fourth
    Oil, one of Canada's major exports, fell after Libya said it
expects to boost production over the next few months and a
report showed a surprise build in U.S. crude inventories last
    U.S. crude oil futures settled 81 cents lower at
$52.49 a barrel.
    The Canadian dollar ended at C$1.3407 to the
greenback, or 74.59 U.S. cents, weaker than Tuesday's close of
C$1.3367, or 74.81 U.S. cents.
    In intraday trading on Tuesday, the loonie touched its
weakest level since Oct. 1 at C$1.3434, pressured by the recent
drop in Canadian yields below U.S. Treasuries.
    Political developments could become an important influence
on the direction of the currency in 2017, including potential
renegotiation of the North American Free Trade Agreement, Spitz
    Donald Trump's U.S. presidential election win last month has
triggered uncertainty about the outlook for NAFTA, which
economists say will discourage investment. 
    A positive development for Canada's economy would be
approval of TransCanada Corp's proposed Keystone XL
pipeline to carry oil sands crude from Alberta to the U.S.
    Canadian Prime Minister Justin Trudeau said Trump was "very
supportive" of the pipeline in their first conversation after
the U.S. election.        
    The U.S. dollar retreated from a 14-year high against
a basket of major currencies, giving back some of the gains
chalked up since Trump's victory. 
    Canadian government bond prices were mixed across the yield
curve, with the two-year down 1 Canadian cent to
yield 0.829 percent and the 30-year climbing 8
Canadian cents to yield 2.400 percent.
    Canada's non-farm payroll jobs declined by 33,600 in October
after increasing 63,700 in the prior month, data from Statistics
Canada showed.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn and Leslie