CANADA FX DEBT-C$ pares its losses as solid data offsets dip in oil

    * Canadian dollar at C$1.2338, or 81.05 U.S. cents
    * Domestic wholesale trade rises 1.5 percent in July
    * Bond prices dip across a flatter yield curve

    By Fergal Smith
    TORONTO, Sept 21 (Reuters) - The Canadian dollar edged lower
on Thursday against its U.S. counterpart as oil prices dipped,
but pared some losses after domestic data showed much
stronger-than-expected growth in wholesale trade.
    The 1.5 percent increase in July wholesale trade exceeded
economists' forecasts for a decline of 0.9 percent and was the
biggest increase since January. Stripping out the effects of
price changes, volumes were even stronger, up 2.1 percent.
    The strength of the data has boosted the outlook for growth
in the economy for the month, offsetting soft manufacturing
data, Nick Exarhos, an economist at CIBC Capital Markets, said
in a research note.
    Economists will turn to Canada's retail sales report, due on
Friday, for further clues on prospects for July gross domestic
product. The country's August inflation report is also due on
    "It is a wait and see now ahead of CPI data out tomorrow,"
said Jeff Scott, senior corporate dealer at CanadianForex.
    A jump in inflation could trigger in October another
interest rate hike by the Bank of Canada, Scott added.
    The central bank hiked rates earlier in September for the
second time in three months.     
    Prices of oil, one of Canada's major exports, gave up some
recent gains before a meeting of oil producers that could extend
production limits aimed at clearing a glut.             
    U.S. crude        prices settled 0.3 percent lower at $50.55
a barrel.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.2338 to the greenback, or 81.05 U.S. cents, down
0.1 percent.
    The currency traded in a range of C$1.2320 to C$1.2368.
    On Wednesday, the loonie hit a 2-week low at C$1.2390 after
the Federal Reserve signaled that it expected to raise interest
rates once more by year-end.
    Mexico and Canada will survive current talks with the United
States on trade relatively unscathed, according to a Reuters
poll of economists.             
    Canadian government bond prices dipped across a flatter
yield curve, with the two-year            down 2 Canadian cents
to yield 1.592 percent and the 10-year             falling 3
Canadian cents to yield 2.109 percent.
    The 10-year yield hovered below a nearly three-year high of
2.119 percent reached earlier this week.
    Still, global investors are warming up to Canadian bonds and
their newly attractive yields, saying there is a limit to how
much the Bank of Canada can diverge from its peers after its two
interest rate hikes this year.              

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
Diane Craft)