CANADA FX DEBT-C$ hits 11-day low as Canada's yield curve inverts

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.4 percent against the greenback
    * Canadian retail sales decline 0.3 percent in January
    * Price of U.S. oil falls 1.6 percent
    * Canada's 10-year yield hits a 21-month low at 1.584

    By Fergal Smith
    TORONTO, March 22 (Reuters) - The Canadian dollar weakened
to a near two-week low against the greenback on Friday as moves
in the bond market and domestic retail sales data pointed to a
slowdown in Canada's economy that could forestall further Bank
of Canada interest rate hikes.
    The gap between Canada's 10-year yield and the yield on the
3-month T-bill turned negative for the first time since August
2007, at about -5 basis points. The U.S. yield curve also
    An inverted yield curve threatens productivity and credit
growth as it makes it less appealing to invest in long-term
projects. It is seen by some investors as a harbinger of
    "The bond market is flashing major warning signals about the
U.S. and Canadian economies," said Adam Button, chief currency
analyst at ForexLive. "There are an abundance of worries in the
Canadian outlook and I would be surprised if the Canadian dollar
didn't fall further from here."
    Domestic data showed that Canadian retail sales fell 0.3
percent in January from December, the third consecutive decline,
and that Canada's annual inflation rate edged up to 1.5 percent
in February but remained below the Bank of Canada's 2.0 percent
target for the second successive month.             
    "It is all consistent with a slower growth trajectory in
Canada," said Andrew Kelvin, senior rates strategist at TD
Securities. "They (the Bank of Canada) are on hold for a while."
    The Bank of Canada has hiked interest rates by 125 basis
points since July 2017 but said this month there is "increased
uncertainty about the timing of future rate increases." Money
markets see about a 60 percent chance of a cut this year.
    At 4:26 p.m. (2026 GMT), the Canadian dollar          was
trading 0.4 percent lower at 1.3417 to the greenback, or 74.53
U.S. cents. The currency, which touched its weakest since March
11 at 1.3429, was down 0.6 percent for the week.
    The decline for the loonie came as weak factory data from
the United States and Europe fueled fears of a global economic
downturn, pressuring stocks on Wall Street and the price of oil,
one of Canada's major exports.             
    U.S. crude oil futures        settled 1.6 percent lower at
$59.17 a barrel.             
    Canadian government bond prices were higher across the yield
curve, with the 10-year             rising 57 Canadian cents to
yield 1.601 percent. The 10-year yield touched its lowest
intraday since June 2017 at 1.584 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and James Dalgleish)