CANADA FX DEBT-C$ hits more than 5-mth low as momentum builds

* Canadian dollar at C$1.1078 or 90.27 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 12 (Reuters) - The Canadian dollar sold off
against the greenback for a second session in a row on Friday,
touching a more than five-month low as a break through technical
resistance barriers lent downward momentum to the currency. 
    The loonie is down 1.6 percent for the week so far as
markets have been focused on trying to gauge when the Federal
Reserve might start to raise interest rates.
    If the currency holds those losses, it will see its worst
week since early January when investors were aggressively
dumping the currency.
    The loonie's weakness has accelerated since Thursday when it
broke through key technical resistance at C$1.10 after previous
failed attempts earlier in the week.    
    A U.S. economic recovery that is picking up steam, as well
as a Fed that might raise rates sooner than had been expected,
are expected to continue to benefit the U.S. dollar to the
detriment of the loonie.
    Optimism over the U.S. economy was reinforced by data that
showed retail sales rose as expected in August, while the
previous month was revised higher. 
    "When you look at the relative performance of the economies
of the U.S. and Canada, decent retail sales numbers reinforce
the mindset that the U.S. is probably still three to six months
ahead of the Canadian economy in terms of where they are in the
recovery," said Scott Smith, senior market analyst at Cambridge
Mercantile Group in Calgary.
    "As that progresses, we'll see continued upward pressure on
the U.S. dollar-Canadian dollar."
    The Canadian dollar was at C$1.1078 to the
greenback, or 90.27 U.S. cents, weaker than Thursday's close of
C$1.1047, or 90.52 U.S. cents. The loonie hit a session low of
C$1.1083, its lowest level since late March.
    Focus on central bank policy is likely to intensify heading
into the Fed's policy-setting meeting next week, with investors
watching for any change in language that would signal when the
Fed will raise rates. 
    The currency pairing was attempting to hold a break above
its next resistance level at C$1.1050. If it is able to sustain
that, C$1.11 and C$1.1125 will be the next targets, said Smith.
    Canadian government bond prices were down across the
maturity curve, with the two-year off 2 Canadian
cents to yield 1.159 percent and the benchmark 10-year
 down 34 Canadian cents to yield 2.237 percent.

 (Editing by Meredith Mazzilli)