CANADA FX DEBT-C$ dives to 12-month low as Fed tapering seen on track

* C$ at C$1.0372 vs US$, or 96.41 U.S. cents
    * Loonie hits weakest level since last June as US$ rallies
    * Flat domestic retail sales data helps push C$ lower
    * Fed hints of less stimulus to come gives US$ a big boost

    By Alastair Sharp
    TORONTO, May 22 (Reuters) - The Canadian dollar lost more
than a cent against its U.S. counterpart on Wednesday, hurt by a
double whammy of soft domestic retail sales data and U.S.
Federal Reserve hints that it might reduce its economic stimulus
program soon.
    The plunge left the loonie, as Canada's currency is
colloquially known, at its weakest level against the greenback
since early June of last year. 
    Traders saw little reason for the U.S. dollar to reverse its
advance after Fed Chairman Ben Bernanke said in congressional
testimony that the central bank could scale back its $85 billion
a month in bond-buying in the "next few meetings" if economic
recovery continues. 
    The release of minutes from the Fed's last meeting added to
market sentiment that the U.S. central bank's so-called
quantitative easing program may be wound down sooner rather than
    "Unless we see contradictory statements that say there will
be absolutely no tapering of QE, I can't see the (U.S.) dollar
backing off," said Blake Jespersen, a managing director of
foreign exchange sales at BMO Capital Markets.
    The loonie ended the session at C$1.0372 to the greenback,
or 96.41 U.S. cents, after earlier hitting an almost 12-month
low of C$1.0388. It closed Tuesday's North American session at
C$1.0268, or 97.39 U.S. cents. 
    Canadian retail sales were unexpectedly flat in March as
gasoline prices fell, but economists pointed to a sharp rise in
volumes as evidence of a more robust economy. 
    "The underlying reality is that whilst sales values were
undermined by the influence of gasoline sales, the volumes were
reasonably OK," said Jeremy Stretch, head of foreign exchange
strategy at CIBC World Markets in London.
     The loonie fell early in the day on the retail sales
figures, recovered a bit, and then was hammered by a flurry of
Fed news.
    By way of illustrating the greenback's singular strength,
the loonie was flat against its commodity-linked cousins, the
Australian and New Zealand dollars, but
slightly weaker against the euro and British pound
    The price of Canadian government debt fell across the curve,
reversing early gains, with longer-dated maturities bearing the
heaviest brunt. 
    The two-year bond slipped more than 4 Canadian
cents to yield 1.030 percent, while the benchmark 10-year bond
 fell 46 Canadian cents to yield 1.964 percent.