CANADA FX DEBT-C$ weakens on lower oil prices, mixed domestic data

(Adds market comment, updates prices)
    * Canadian dollar ends at C$1.3769, or 72.63 U.S. cents
    * Bond prices lower across the maturity curve

    By Alastair Sharp
    TORONTO, Feb 19 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as crude oil prices
tumbled and domestic data showed a sharp drop in retail sales
but a jump in inflationary pressures, although the currency
later pared some of its initial losses.
    Canadian retail sales fell 2.2 percent in December after
rising 1.7 percent in November as unseasonably warm weather cut
into seasonal purchases. It was the largest such decline since
April 2010 and far exceeded the 0.6 percent drop predicted by
analysts in a Reuters poll. 
    "The numbers were weaker. That probably played into the
initial move we saw in Canada, but at the end of the day they're
December numbers so the market moved past those," said Matt
Perrier, managing director of foreign exchange sales at BMO
Capital Markets.
    The Canadian dollar settled at C$1.3769 to the
greenback, or 72.63 U.S. cents, weaker than Thursday's official
close of C$1.3749, or 72.73 U.S. cents.
    The currency's strongest level of the session was C$1.3715,
while its weakest level was C$1.3846.
    The annual inflation rate accelerated in January to its
highest level since November 2014, reaching the Bank of Canada's
2 percent target, lifted by food prices and the first increase
in the cost of gasoline in over a year. 
    The mixed economic data suggested a combination of weak
growth and growing inflationary pressures, said Paul Ferley,
assistant chief economist with the Royal Bank of Canada.
    The implied probability of a rate cut by the end of 2016
dipped briefly before returning to 87 percent.
    "The markets are still being too aggressive in pricing Bank
(of Canada) easing over the course of the year," said Derek
Holt, vice president of economics at Scotiabank.
    Oil prices fell on Friday as talk this week of a coordinated
plan by producers to freeze output levels was offset by a record
build in U.S. crude inventories. 
    U.S. crude settled down 3.7 percent at $29.64 a
    A sell-off in global stocks added to pressure on
commodity-linked currencies including the Canadian dollar as
worries about the global economic outlook returned to the
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 3.5
Canadian cents to yield 0.452 percent and the benchmark 10-year
 lost 8 cents to yield 1.12 percent.

 (Additional reporting by Fergal Smith; Editing by Paul Simao
and Sandra Maler)