CANADA FX DEBT-C$ extends fall after retail sales disappoint

   * C$ down at 96.44 U.S. cents

 * Bonds mixed, await U.S. Federal Reserve decision

 * Canada retail sales fall more than expected 2.0 pct
 (Updates with reaction from retail sales data)

 TORONTO, June 23 (Reuters) - The Canadian dollar extended
losses to approach a two-week low against the U.S. currency
 on Wednesday after a much sharper-than-expected 2.0 percent
drop in domestic retail sales in April.

 Weak autos helped depress Canada's April retail sales,
putting the month well behind the median forecast for a 0.4
percent drop in retail sales, according to  government data
released on Wednesday [ID:nN23196800].

 "This was quite a disappointing report. The broad-based
nature of it suggests that during the month Canadians more or
less sat on their hands," said Millan Mulraine, economics
strategist at TD Securities.

 He said the report was unlikely to prevent the Bank of
Canada from raising rates next month.

 At 8:55 a.m. (1255 GMT), the Canadian dollar was at
C$1.0369 to the U.S. dollar, or 96.44 U.S. cents, down from
C$1.0291 to the U.S. dollar, or 97.17 U.S. cents, at Tuesday's
close.

 Additionally, the currency was tugged lower by weak oil
prices, which fell towards $77 a barrel, and overhanging
worries about the pace of recovery.

 "If you look at the U.S. data as of late it looks to be
mixed, if not weaker than the market would like. That seems to
be the driving factor, that maybe economic growth is stalling,"
said Jon Gencher, director of foreign exchange sales at BMO
Capital Markets.

 "That certainly has the market trading on a very cautious
note," said Gencher. He noted data on Tuesday that showed a
drop in existing home sales follows a string of weaker than
expected U.S. economic data.

 Market players also await an announcement by the U.S.
Federal Reserve later in the day. The U.S. central bank is
expected to restate its intention to keep interest rates on
hold near zero percent for "an extended period" and perhaps
offer a less upbeat outlook for the economy. [ID:nN22150078]

 The currency's move lower on Wednesday comes after the Bank
of Canada said the day before the currency's drag on the
Canadian recovery could be a key issue in future monetary
policy.

 Bank of Canada Deputy Governor Timothy Lane said the value
of the Canadian currency against the U.S. dollar would affect
the central bank's decision on interest rates on July 20 and
beyond. [ID:nTOR007606]  [ID:nN22144820]

 Lane's comments, coupled with earlier inflation data,
raised some doubt over what the central bank might do at the
July 20 rate announcement.  [ID:nN22110502]

 Canadian government bond prices were mixed, with short term
bonds advancing after the weaker-than-expected retail sales
report. Long-dated issues were weaker.

 The two-year government bond CA2YT=RR was up 6 Canadian
cents to yield 1.664 percent, while the 10-year bond
CA10YT=RR dipped 8 Canadian cents to yield 3.268 percent.
 (Reporting by Ka Yan Ng and Jennifer Kwan)

 (Reporting by Ka Yan Ng; editing by W Simon  )