CANADA FX DEBT-C$ hits 11-day low as inflation rise misses forecasts

    * Canadian dollar at C$1.2717, or 78.63 U.S. cents
    * Loonie touches its weakest since April 9 at C$1.2718
    * Canada's inflation rate edges up to 2.3 pct in March
    * Bond prices mixed across steeper yield curve

    By Fergal Smith
    TORONTO, April 20 (Reuters) - The Canadian dollar weakened
to an 11-day low against its U.S. counterpart on Friday after
data showed domestic inflation rose less than expected, with the
currency extending its decline since the Bank of Canada held
interest rates steady two days ago.
    Canada's annual inflation rate in March edged up to 2.3
percent from 2.2 percent in February, the highest level in more
than three years, Statistics Canada said.             
    Still, it was less than the 2.4 percent forecast by
analysts, while the Bank of Canada's three measures of core
inflation were little changed.
    "The markets are a little bit disappointed because the
numbers are softer than anticipated." said Derek Holt, head of
capital economics at Scotiabank. "But to me, it still keeps May
in play for the Bank of Canada."
    The central bank left its benchmark interest rate on hold at
1.25 percent on Wednesday and said it did not know when or how
aggressive it would need to be to keep inflation in check.
    Chances of an interest rate hike in May were little changed
at 35 percent after the data, the overnight index swaps market
    In separate data, Canadian retail sales grew by 0.4 percent
in February as higher sales at auto dealerships and general
merchandise stores outweighed widespread weakness in other
sectors, Statistics Canada said. Analysts had expected a 0.3
percent gain.
    At 9:24 a.m. EDT (1324 GMT), the Canadian dollar         
was trading 0.4 percent lower at C$1.2717 to the greenback, or
78.63 U.S. cents. The currency touched its weakest level since
April 9 at C$1.2718.
    The price of oil, one of Canada's major exports, fell on
Friday after U.S. President Donald Trump criticized the
Organization of the Petroleum Exporting Countries and said oil
prices were artificially high.             
    U.S. crude        prices were down 0.4 percent at $68.03 a
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            up 3.4 Canadian cents
to yield 1.921 percent and the 10-year             falling 5
Canadian cents to yield 2.327 percent.
    The gap between Canada's 2-year yield and its U.S.
counterpart widened by 2.2 basis points to a spread of -52.0
basis points.

 (Reporting by Fergal Smith; Editing by David Gregorio)