September 18, 2019 / 1:33 PM / a month ago

CANADA FX DEBT-Loonie holds steady as market shrugs off inflation dip

    * Canadian dollar trades in a range of 1.3240 to 1.3271
    * Canada's annual inflation rate falls to 1.9% in August
    * Price of U.S. oil decreases 1.9%
    * Canada's 10-year yield touches a six-day low at 1.432%

    TORONTO, Sept 18 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Wednesday, as data
showing a slight slowdown in domestic inflation failed to move
the needle on Bank of Canada interest rate expectations.
    Canada's annual inflation rate dipped to 1.9% in August from
2.0% in July on lower gasoline prices, while the average of the
Bank of Canada's three preferred measures of core inflation was
little changed at 2.0%, data from Statistics Canada showed.
            
    Chances that the central bank would cut interest rates by
the end of the year held steady at 30%, data from the overnight
index swaps market showed.           
    Meanwhile, investors expect the U.S. Federal Reserve to ease
rates on Wednesday by a quarter of a percentage point, although 
some market participants were buying the U.S. dollar in case the
Fed signals a more confident view.             
    At 9:11 a.m. (1311 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3248 to the greenback, or 75.48
U.S. cents. The currency, which hit on Tuesday a near two-week
low at 1.3300, traded in a range of 1.3240 to 1.3271.
    The price of oil, one of Canada's major exports, extended
the previous day's decline after Saudi Arabia said it would
quickly restore full production following last weekend's attacks
on its facilities. U.S. crude oil futures        were down 1.9%
at $58.23 a barrel,             
    Canadian government bond prices edged higher across the
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 1 Canadian cent to yield 1.606% and the 10-year
            was up 2 Canadian cents to yield 1.447%.
    The 10-year yield touched its lowest intraday since Sept. 12
at 1.432%.       

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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