CANADA FX DEBT-C$ hits a 6-week low on Fed speculation, soft data

(Adds analyst quotes, details on Bank of Canada poll, updates
    * Canadian dollar ends at C$1.3105, or 76.31 U.S. cents
    * Bond prices higher across the maturity curve

    By Fergal Smith
    TORONTO, May 19 (Reuters) - The Canadian dollar weakened to
a fresh six-week low against its U.S. counterpart on Thursday as
Federal Reserve interest rate hike speculation supported the
greenback and weighed on commodities, while domestic data was
weaker than expected.
    The loonie has fallen 5 percent from a 10-month high of
C$1.2461 on May 3 after soft domestic data and production cuts
in Alberta's oil sands region hurt Canada's economic outlook,
while the odds of U.S. interest rate hikes have climbed over the
past week. 
    "It's all about the Fed," said Michael Goshko, Corporate
Risk Manager at Western Union Business Solutions, adding that
Fed officials have sent a message that the market has
underestimated the risk of higher interest rates.
    The U.S. dollar rose to a seven-week high against a
basket of major currencies after Fed minutes on Wednesday
signaled that a rate hike is firmly on the table for June.
    "We have seen a decidedly mixed picture from Canadian data
of late," Goshko said, including "shockingly bad" international
merchandise trade data.
    The value of Canadian wholesale trade dropped by a
deeper-than-expected 1.0 percent in March, although the drop in
sales was less pronounced in volume terms at 0.4 percent.
    Oil prices dipped, pressured by a stronger dollar and a
surprise increase in U.S. crude inventories. U.S. crude 
prices settled at $47.16 a barrel, down 3 cents. 
    The Canadian dollar ended at C$1.3105 to the
greenback, or 76.31 U.S. cents, weaker than Wednesday's close of
C$1.3023, or 76.79 U.S. cents.
    The currency's strongest level of the session was C$1.3012,
while it touched its weakest since April 8 of C$1.3155.
    The Bank of Canada is expected to strike a more dovish tone
in its May policy statement, partly due to a still-raging
wildfire in Alberta that has disrupted oil production, but a
Reuters poll suggests it will not cut interest rates again.
    Firefighters made progress against a wildfire in the Fort
McMurray region of Alberta as a shift in winds pushed it away
from communities and oil sands facilities. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 3 Canadian
cents to yield 0.624 percent and the benchmark 10-year
 rising 23 Canadian cents to yield 1.344 percent.
    The 10-year yield touched its highest since May 5 of 1.394
    Investors are awaiting Canada's March retail sales data and
April inflation data, set for release on Friday. 

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Diane Craft)