CANADA FX DEBT-C$ hits one-week high on robust inflation, retail sales data

    * Canadian dollar at C$1.2761, or 78.36 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, Dec 21 (Reuters) - The Canadian dollar hit its
strongest level against its U.S. counterpart in a week on
Thursday, boosted by strong inflation and retail sales data that
raised expectations the Bank of Canada could hike rates again as
soon as January.
    * At 9:17 a.m. ET (1417 GMT), the Canadian dollar         
was trading at C$1.2761 to the greenback, or 78.36 U.S. cents,
up 0.6 percent.
    * It had touched C$1.2720, or 78.62 U.S. cents, soon after
the 8:30 a.m. release of November inflation data and October
retail sales numbers.                          
    * The data suggested an earlier-than-expected hike, said
Andrew Grantham, a senior economist at CIBC Capital Markets.
"We're seeing that play out in financial markets," he said. 
    * Chances of a rate hike in January have increased to 49
percent from 38 percent just before the data releases, the
overnight index swaps market indicated.           
    * Canadian government bond prices were lower across the
maturity curve, with the two-year            price down 7.5
Canadian cents to yield 1.681 percent and the benchmark 10-year
            falling 47 Canadian cents to yield 2.05 percent.
    * The Canada-U.S. two-year bond spread narrowed to -18.4
basis points, while the 10-year spread came in to -45 basis

 (Reporting by Alastair Sharp; Editing by Bernadette Baum)