March 22, 2019 / 2:06 PM / a year ago

CANADA FX DEBT-C$ hits 11-day low as data points to slowing domestic economy

    * Canadian dollar falls 0.3 percent against the greenback
    * Canadian retail sales decline 0.3 percent in January
    * Canada's 10-year yield hits a 21-month low at 1.600

    By Fergal Smith
    TORONTO, March 22 (Reuters) - The Canadian dollar weakened
to an 11-day low against its U.S. counterpart on Friday as the
greenback broadly climbed and data supported the view of a
slowing domestic economy that rules out further Bank of Canada
interest rate hikes in the near term.
    At 9:47 a.m. (1347 GMT), the Canadian dollar          was
trading 0.3 percent lower at 1.3400 to the greenback, or 74.63
U.S. cents. The currency, which touched its weakest since March
11 at 1.3428, was on track to fall 0.5 percent for the week. 
    The value of Canadian retail sales fell 0.3 percent in
January from December, the third consecutive decline, pulled
down in large part by weak auto sales, Statistics Canada data
indicated. Analysts had forecast sales would increase by 0.4
    Separate data from Statistics Canada showed that Canada's
annual inflation rate edged up to 1.5 percent in February but
remained below the Bank of Canada's 2.0 percent target for the
second successive month.             
    "It is all consistent with a slower growth trajectory in
Canada," said Andrew Kelvin, senior rates strategist at TD
Securities. "They (the Bank of Canada) are on hold for a while."
    The Bank of Canada has hiked interest rates by 125 basis
points since July 2017 but said this month that there is
"increased uncertainty about the timing of future rate
increases." Money markets see about a 50 percent chance of a cut
this year.           
    The U.S. dollar        climbed against a basket of major
currencies after a much weaker-than-expected German
manufacturing survey pressured the euro.             
    The price of oil, one of Canada's major exports, fell
further from 2019 highs as focus shifted to a lack of progress
in U.S.-China trade talks.  U.S. crude oil futures        were
down 1.4 percent at $59.17 a barrel.             
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries and German Bunds. The
two-year            rose 8.5 Canadian cents to yield 1.557
percent and the 10-year             climbed 54 Canadian cents to
yield 1.605 percent.
    The 10-year yield touched its lowest intraday since June
2017 at 1.600 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas)
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