CANADA FX DEBT-C$ hits 18-month low as Fed disappoints Wall St

 (Adds strategist quotes and details on activity; updates
    * Canadian dollar falls 0.1 percent against greenback
    * Canada's annual inflation rate falls to 1.7 percent
    * U.S. oil prices rally 2.1 percent
    * Bond prices rise across a flatter yield curve
    * Canada's 10-year yield falls below 2 percent

    By Fergal Smith
    TORONTO, Dec 19 (Reuters) - The Canadian dollar weakened to
a 1-1/2-year low against the greenback on Wednesday, pressured
by softer-than-expected domestic inflation data and further
declines on Wall Street as the Federal Reserve again raised
interest rates.
    At 3:53 p.m. (2053 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3488 to the greenback, or 74.14
U.S. cents. The currency touched its weakest level since June
2017, at 1.3507.
    "There really isn't a strong catalyst for reversal here,
basically in a situation where equities continue to fall under
pressure," said Mazen Issa, senior FX strategist at TD
Securities. "CAD retains a bit of sensitivity to the overall
equity dynamic." 
    Stocks fell after the Fed delivered its fourth hike of 2018,
as expected. Though the central bank forecast fewer rate hikes
next year in the face of financial market volatility and slowing
global growth, it fell short of investors' hopes of a more
dovish monetary policy.             
    Canada exports many commodities, including oil, and runs a
current account deficit, so its economy could be hurt if the
global flow of trade or capital slows.    
    Lower gas prices pulled Canada's annual inflation rate in
November down to 1.7 percent, the first time in 10 months it has
been below the Bank of Canada's 2.0 percent target, Statistics
Canada data indicated. Analysts had forecast the rate would fall
to 1.8 percent from 2.4 percent in October.             
    The slowdown in inflation indicates that the Bank of Canada
can be "less hurried to raise rates," Issa said.
    Chances of a Bank of Canada interest rate hike in March
dropped to 13 percent from 17 percent before the data, the
overnight index swaps market showed. Bets on further tightening
had already been slashed after a dovish policy announcement
earlier this month from the central bank.                       
    The loonie lost ground on Wednesday even as the price of oil
recovered somewhat from a sharp selloff during the previous
session. U.S. crude oil futures        settled 2.1 percent
higher at $47.20 a barrel.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 5 Canadian cents to yield 1.895 percent and the
10-year             climbed 38 Canadian cents to yield 1.971
    The 10-year yield touched its lowest level since Dec. 20,
2017, at 1.949 percent.

 (Reporting by Fergal Smith
Editing by Leslie Adler)