CANADA FX DEBT-C$ recovers, bonds firm after retail data

   * Canada July retail sales slip unexpectedly

 * Oil price surge helps C$ recoup losses from weak data

 * C$ up at 97.66 U.S. cents, bonds firm
 (Adds details, analyst comment)

 TORONTO, Sept 22 (Reuters) - The Canadian dollar recouped
data-related losses and rose against the U.S. dollar on
Wednesday morning as the price of oil soared to approach $76 a
barrel due to weakness in the greenback. [O/R]

 The Canadian currency fell early in the session, while
government bond prices surged, after data showed Canadian
retail sales fell unexpectedly in July and could give the Bank
of Canada more reason to take a break from interest-rate
increases.

 At 9:50 a.m. (1350 GMT), the currency CAD=D3  was at
C$1.0240 to the U.S. dollar, or 97.66 U.S. cents, up from
Tuesday's finish at C$1.0268 to the U.S. dollar, or 97.39 U.S.
cents.

 It hit a session low of C$1.0288 to the U.S. dollar, or
97.20 U.S. cents, earlier in the day after Statistics Canada
said total retail sales in July edged 0.1 percent lower,
instead of a 0.6 percent rise expected by market operators.

 Statistics Canada also revised its June retail sales figure
to show a flat reading versus the 0.1 percent gain it initially
estimated. [ID:nN22252766]

 "Overall it was just a very soft data release and it
followed already two other weak data releases for July --
wholesale sales and manufacturing sales," said Matthew Strauss,
senior currency strategist at RBC Capital Markets.

 "July is setting up to be a quite disappointing month and
next week's GDP numbers will probably confirm that it's a
pretty slow start to the third quarter."

 The figures prompted market players to further price out
chances of further rate hikes by the Bank of Canada, providing
a boost to government bond prices.

 Market pricing, as measured by a Reuters calculation of
yield on overnight index swaps, indicated about a 76 percent
likelihood of no change in interest rates at the Bank of
Canada's policy-decision date next month, rising from around 64
percent on Tuesday afternoon. BOCWATCH

 The two-year bond was up 9 Canadian cents to yield 1.413
percent, while the 10-year bond gained 33 Canadian cents to
yield 2.859 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)