* C$ down at C$0.9890 to the U.S. dollar, or $1.0111
* Bond prices flat to lower after three-session surge
* Canada's annual inflation rate eases in July
* Focus squarely on Carney, Flaherty testimony
By Ka Yan Ng and Trish Nixon
TORONTO, Aug 19 Canada's dollar was slightly
weaker against the U.S. currency on Friday morning, shrugging
off July inflation data, as focus turned to testimony from
Canadian policymakers facing questions about the domestic
economy later in the session.
Canadian Finance Minister Jim Flaherty and Bank of Canada
Governor Mark Carney will be grilled by a parliamentary
committee on the possible fallout for the domestic economy from
global economic turmoil. Flaherty is scheduled to speak at 9
a.m. (1300 GMT), followed an hour later by Carney. For more
details, see [ID:nN1E77F1AL]
Their appearance in Ottawa marks the key event of the
session for Canadian markets, as the data released by
Statistics Canada suggested no inflation pressures, leaving the
Bank of Canada some breathing room to leave rates unchanged for
"Very neutral data. Pretty much in line with where the
market had expected, and also falling back slightly from last
month on some of the numbers, which I think just provides some
flexibility to the Bank of Canada," said Camilla Sutton, chief
currency strategist at Scotia Capital.
"Now I think the market is just turning to what Carney will
or won't say at today's appearance."
Data showed Canada's annual inflation rate eased in July to
2.7 percent from 3.1 percent in June, in part because the
introduction of higher sales taxes in three provinces is no
longer included in calculations, Statistics Canada said on
Although July marked the 10th straight month that overall
inflation has been above the Bank of Canada's 2 percent target,
the figure was well below the eight-year high of 3.7 percent
recorded in May. Market analysts had forecast the July rate
would be 2.8 percent.
The closely watched annual core rate, which strips out
prices of some volatile items, rose to 1.6 percent from 1.3
percent in June.
At 7:40 a.m. (1140 GMT), the currency was at C$0.9890 to
the U.S. dollar, or $1.0111, down slightly from Thursday's
session close at C$0.9884 to the U.S. dollar, or $1.0117.
Government bond prices were flat to lower on Friday
morning, giving back a fraction of rally of the past three
The two-year bond CA2YT=RR was off 1 Canadian cent to
yield 0.867 percent, while the 10-year bond CA10YT=RR fell
26 Canadian cents to yield 2.329 percent.
(Reporting by Ka Yan Ng and Trish Nixon; Editing by Theodore