* C$ edges up to C$0.9852 to the U.S. dollar, or $1.0150
* Bond prices lower after three-session surge
* Canada's annual inflation rate eases in July
* Carney, Flaherty soothe on world economy, ready to act
By Ka Yan Ng
TORONTO, Aug 19 Canada's dollar was firmer
against the U.S. currency at midday on Friday, reassured by
testimony from top Canadian policymakers that while risks
remain in the global economy, Ottawa is ready to intervene in
case of major world turmoil.
In testimony before a parliamentary committee on Friday,
Bank of Canada Governor Mark Carney and Finance Minister Jim
Flaherty both highlighted the risks posed by Europe's stubborn
debt crisis and the slow U.S. recovery from recession.
But neither forecast a recession in either area, although
Carney admitted that Canada's economy might contract in the
second quarter. [ID:nN1E77I0KX] [ID:nN1E77I0L1]
"There wasn't anything too bombastic out of Governor Carney
to convince the dollar to move in any sustained manner as a
result of his testimony," said David Tulk, chief Canada macro
strategist at TD Securities.
At 12:15 p.m. (1615 GMT), the currency was at C$0.9852 to
the U.S. dollar, or $1.0150, up moderately from Thursday's
session close at C$0.9884 to the U.S. dollar, or $1.0117.
The appearance by Carney and Flaherty in Ottawa marked the
key event of the session for domestic markets, as inflation
data for July, released earlier by Statistics Canada, suggested
no inflation pressures, leaving the Bank of Canada some
breathing room to stand pat on rates for now. [ID:nN1E77I02W]
"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.
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
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.
Government bond prices moved lower, giving back a fraction
of rally of the past three sessions. The two-year bond
CA2YT=RR was off 8 Canadian cent to yield 0.900 percent,
while the 10-year bond CA10YT=RR fell 11 Canadian cents to
yield 2.313 percent.
(Additional reporting by Trish Nixon; editing by Rob Wilson)