CANADA FX DEBT-C$ holds near eight-day low as bets rise for rate cut

    * Canadian dollar trades nearly unchanged against the
    * U.S. oil prices decrease by 1.6%
    * Canadian bond prices move higher across the yield curve
    * Canada's curve inverts further to the most in two decades

    By Levent Uslu
    TORONTO, Aug 15 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday but held close
to an eight-day low it hit earlier in the session as investors
raised bets for an interest rate cut this year by the Bank of
    The inversion of Canada's yield curve by the most in nearly
two decades is threatening to coerce the Bank of Canada to cut
interest rates rather than risk an economic downturn, portfolio
managers said.             
     Chances of a Bank of Canada interest rate cut this year
climbed to nearly 100% from less than 90% on Wednesday, the
overnight index swap market indicated.           
    Last month, the Bank of Canada highlighted the risks that
trade wars pose to the global economy as it left its benchmark
interest rate unchanged at 1.75%.             
    At 10:03 a.m. (1403 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3319 to the greenback, or 75.08
U.S. cents. The currency touched its weakest intraday level
since last Wednesday at 1.3338.
    The eight-day low for the loonie came despite domestic data
showing that non-farm payroll employment rose by 73,700 in July
and that home sales climbed for a fifth consecutive month.
    Meanwhile, the price of oil, one of Canada's major exports,
fell on mounting recession concerns and a surprise boost in U.S.
crude inventories. U.S. crude oil futures        were down 1.6%
at $54.36 a barrel.             
    Canadian government bond prices were higher across a more
inverted yield curve, with the two-year            up 4.3
Canadian cents to yield 1.329% and the 10-year            
rising 23.7 Canadian cents to yield 1.120%.
    The 10-year yield fell 0.1 basis points further below the
2-year yield to a spread of -20.6 basis points, the curve's
largest inversion since May 1999. An inverted curve is seen by
some investors as a harbinger of recession.

 (Reporting by Levent Uslu; Editing by Bernadette Baum)