CANADA FX DEBT-C$ rebounds from 1-year low; oil surge counters domestic data

 (Recasts with effect of oil prices; adds comment; updates
    * Canadian dollar at C$1.3276, or 75.32 U.S. cents
    * Loonie touches its weakest level in a year at C$1.3384
    * Price of U.S. oil rises 4.6 percent 
    * Bond prices higher across a steeper yield curve

    By Fergal Smith
    TORONTO, June 22 (Reuters) - The Canadian dollar gained
against the greenback on Friday, recovering from an earlier
one-year low, as a jump in oil prices offset domestic inflation
and retail sales data that crimped expectations for a Bank of
Canada interest rate hike next month.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.3 percent higher, at C$1.3276 to the greenback, or
75.32 U.S. cents.
    After the data, the currency touched its weakest intraday
level since June 12, 2017, at C$1.3384.    
    "It has been quite a ride for the Canadian dollar," said
Shaun Osborne, chief currency strategist at Scotiabank. "I think
most of that is due to the fact that oil prices have ground
higher after the OPEC agreement."
    The price of oil, one of Canada's major exports, soared
after the Organization of the Petroleum Exporting Countries and
other top crude producers agreed to just modest crude output
    U.S. crude oil futures        settled 4.6 percent higher at
$68.58 a barrel.
    Canadian retail sales fell 1.2 percent in April, the largest
drop in more than two years, and inflation remained at 2.2
percent. While the inflation rate was above the central bank's
2.0 percent target, markets had expected an uptick to 2.5
    Chances of a Bank of Canada interest rate hike at the July
11 announcement fell to less than 50 percent from 69 percent
before the data, the overnight index swaps market indicated.
    The market may now be underestimating the likelihood of a
hike because the data was impacted by poor weather and the Bank
of Canada is forward looking, Osborne said.
    "Other indicators generally suggest the economy is doing OK
and price pressures are likely to pick up, particularly looking
at wages and the general tightness in the labor market," he
    For the week, the loonie fell 0.7 percent after being
pressured by an uncertain outlook for trade.
    Still, speculators have cut bearish bets on the Canadian
dollar for a second straight week, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of June 19, net short positions dipped to 14,014 contracts from
14,988 a week earlier.    
    Canadian government bond prices were higher across a steeper
yield curve, with the two-year            up 5 Canadian cents to
yield 1.799 percent.
    The 2-year yield fell 3.2 basis points further below its
U.S. equivalent to a spread of -74.6 basis points, its widest
gap since March 2007.

 (Reporting by Fergal Smith
Editing by Phil Berlowitz and Leslie Adler)