CANADA FX DEBT-C$ hits a one-month low, weakens through C$1.08

* Canadian dollar at C$1.0814 or 92.47 U.S. cents
    * Bond yields lower, 10-yr at more than one-year low

 (Recasts with currency decline and updated prices; adds details
and quotes)
    By Leah Schnurr
    TORONTO, July 25 (Reuters) - The Canadian dollar hit a more
than one-month low against the greenback on Friday, capping an
otherwise staid week with a sharp drop as it got caught in a
wide U.S. dollar rally. 
    The Canadian dollar was modestly weaker in morning trading
following better-than-expected U.S. durable goods data, which
benefited the greenback. 
    But loonie selling picked up through the session as the
currency broke through key technical areas, piercing the C$1.08
level and dropping out of its recent trading range.
    A lackluster performance by other commodity-sensitive
currencies against the greenback also pressured the loonie,
analysts said.
    "It's definitely caught a lot of people by surprise,
especially because over the last several weeks we've been very
range-bound, not really reacting too heavily to a lot of news,"
said Rahim Madhavji, president of in
    Analysts said some of the move in favor of the U.S. dollar
was due to investor positioning ahead of some key U.S. economic
data next week that is expected to come in strong, including
second-quarter gross domestic product and July's unemployment
    The Canadian dollar ended the North American
session at C$1.0814 to the greenback, or 92.47 U.S. cents,
weaker than Thursday's close of C$1.0745, or 93.07 U.S. cents. 
    The currency's session low was C$1.0822, its lowest level
since mid June. For the week, the Canadian dollar lost 0.8
    The loonie had rallied 1.6 percent through June but it
pulled back after a disappointing Canadian jobs report in early
July and has since traded largely sideways.
    "The Canadian dollar has been on the defensive a little more
over the past couple of weeks, following the rebound we had two
weeks ago from the C$1.06 area after the poor Canadian
employment numbers," said Shaun Osborne, chief currency
strategist at TD Securities in Toronto. "And I think what we're
seeing today is just a continuation of that move." 
    Osborne said the loonie is likely to fall further. He
expects to see it at C$1.09 over the next week or two, pushing
toward C$1.10 and C$1.12 in the next few months.
    Canadian government bond yields tumbled, with the yield on
the benchmark 10-year falling to a more than
one-year low at 2.112 percent. The two-year price was
up 3 Canadian cents to yield 1.083 percent.

 (Editing by Peter Galloway)