CANADA FX DEBT-C$ gains for 2nd week as inflation data boosts rate-hike bets

 (Adds strategist quotes and details on activity; updates
    * Canadian dollar dips 0.1 percent against greenback
    * Loonie is on track to rise 0.9 percent for the week
    * Price of U.S. oil rises 0.7 percent
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Sept 21 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday, but was on track to gain
for the second straight week as data showing a pickup in
underlying inflation boosted bets for a Bank of Canada interest
rate hike next month.
    Canada's annual inflation rate dipped to 2.8 percent in
August from 3.0 percent in July, the seventh consecutive month
it has exceeded the Bank of Canada's 2.0 percent target,
Statistics Canada data indicated. All of the central bank's core
inflation measures were 2.0 percent or higher, for the first
time since February 2012.             
    "I thought the inflation data was pretty robust," said Amo
Sahota, director at Klarity FX in San Francisco. "This keeps the
market on track for looking at some more Canadian rate hikes."
    The Bank of Canada has raised interest rates four times
since July 2017. Chances of another hike in October rose to
nearly 90 percent from 85 percent before the data, the overnight
index swaps market indicated.            
    Separate data showed that Canadian retail trade rose 0.3
percent in July from June.             
    At 3:31 p.m. (1931 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.2916 to the greenback, or 77.42
U.S. cents.
    The currency, which touched its strongest in more than three
months on Thursday at 1.2885, traded in a range of 1.2886 to
    For the week, the loonie is on track to rise 0.9 percent,
building on a 1 percent gain last week. The currency has been
boosted by a pick up in risk appetite and optimism that a deal
would be reached to renew the North American Free Trade
    Still, the United States is getting "very, very close" to
having to move forward on its trade deal with Mexico without
Canada, White House economic adviser Kevin Hassett said.
    Canada sends 75 percent of its exports to the United States,
so its economy could be hurt if a deal is not reached.     
    The U.S. dollar        rose against a basket of currencies
as fears that Britain would leave the European Union without a
trade deal pressured sterling       .             
    The price of oil, one of Canada's major exports, climbed
ahead of a meeting of OPEC and other large crude exporters. U.S.
crude oil futures        settled 0.7 percent higher at $70.78 a
    Canadian government bond prices were lower across the yield
curve, with the 10-year             falling 8 Canadian cents to
yield 2.431 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Susan Thomas)