CANADA FX DEBT-C$ touches 8-month low as traders expect gradual rate hikes

    * Canadian dollar at C$1.3065 or 76.54 U.S. cents
    * Bond prices mixed across the maturity curve

    March 16 (Reuters) - The Canadian dollar touched a fresh
more than eight-month low against the greenback on Friday as the
market continued to assess how quickly more interest rate hikes
could come in the face of trade uncertainty with the United
    * At 8:45 a.m. EDT (1245 GMT), the Canadian dollar         
was trading down 0.1 percent at C$1.3065 to the greenback, or
76.54 U.S. cents.
    * The currency's weakest level of the session was C$1.3095,
its lowest level since June 28, shortly before the Bank of
Canada began raising interest rates last year.
    * The declines put the currency on course to lose 2 percent
this week, its biggest weekly decline in over a year. 
    * The loonie has been hit by comments earlier from the head
of the Bank of Canada this week that reinforced expectations the
central bank can take its time raising rates after hiking three
times since last July.             
    * Markets also expect policymakers may wait for greater
clarity on the future of U.S. trade policy after worries about a
trade war ramped up after President Donald Trump imposed tariffs
on steel and aluminum imports earlier this month.
    * While Canada was exempted, Trump said the reprieve would
be in place so long as there was progress on talks to
renegotiate the North American Free Trade Agreement.
    * On the economic front, Canadian factory sales in January
fell by 1.0 percent, the biggest drop in six months, on weakness
in motor vehicles, as well as aerospace products and parts.
    * The report suggests that January economic growth "could
look soggy to open the new year," Royce Mendes, economist at
CIBC Economics, wrote in a note.
    * Separate data showed foreign investment in Canadian
securities resumed in January after a dip in December but fell
far short of the monthly purchases seen in much of the second
half of 2017.             
    * Canadian government bond prices were mixed across the
maturity curve, with the two-year            price down 0.5
Canadian cent to yield 1.763 percent and the benchmark 10-year
            rising 1 Canadian cent to yield 2.144 percent.

 (Reporting by Leah Schnurr in Ottawa
Editing by Nick Zieminski)