CANADA FX DEBT-C$ ends week down 1.2 pct after slip in inflation
* C$ at C$1.0263 vs US$, or 97.44 U.S. cents; falls 1.2 pct in week * March inflation slowed to 1.0 pct from 1.2 pct in Feb * CIBC suggests possibility Fed could hike before Bank of Canada * Bond prices mostly modestly lower By Alastair Sharp TORONTO, April 19 (Reuters) - The Canadian dollar weakened slightly against its U.S. counterpart on Friday to end a dismal week for the currency, as domestic inflation data for March came in lower than the prior month. The subdued end to the week contrasted with a sharp fall on Monday that helped push the currency to a 1.2 percent loss for the week as a string of commodity prices plummeted. The currency also slipped on Wednesday after outgoing Bank of Canada Governor Mark Carney slashed growth forecasts, but held on to a hawkish bent in one of his last major appearances as head of the central bank. Analysts said attention will now turn to who may replace him and whether fresh data supports the revised view. "Now we heard the last of Carney's regime on Wednesday, the market will turn to who assumes his role and how hawkish or dovish they are," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets. The highlight on Canada's data front for next week is a reading of retail sales on Tuesday. "We'll be looking to see if the growth projections are achievable," Mikolich said, after the central bank slashed its outlook to 1.5 percent growth for this year. Economists at CIBC published a note on Friday suggesting the U.S. Federal Reserve, still actively engaged in unconventional monetary easing, could start raising interest rates before the Bank of Canada, which is still holding on to a hawkish tone that puts it at odds with its peers in other developed economies. If such a view becomes more popular it would heap additional pressure on the loonie, as Canada's currency is colloquially known. The annual inflation rate last month slowed to 1.0 percent from 1.2 percent in February, further underlining how little pressure there is on the Bank of Canada to raise rates any time soon. "After quite a bit of volatility in the prior few months, Canadian inflation has shown its true colors a little more clearly this month - and those colors are pretty bland. For a change there wasn't a big surprise," said Doug Porter, chief economist at BMO Capital Markets. Overnight index swaps, which trade based on expectations for the central bank's key policy rate, showed that after the announcement traders trimmed their very small bets on an interest rate cut later this year. The Canadian dollar ended the week changing hands at C$1.0263 to the greenback, or 97.44 U.S. cents, compared with Thursday's North American close at C$1.0260, or 97.47 U.S. cents. Canadian government bond prices were mostly modestly lower across the curve, with the two-year bond unchanged with a yield of 0.940 percent, while the benchmark 10-year bond shed 3 Canadian cents to yield 1.709 percent.
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