CANADA FX DEBT-C$ retreats after weaker than expected inflation data

TORONTO, Dec 19 (Reuters) - The Canadian dollar weakened against the U.S. currency on Friday after data showed the country's annual inflation rate eased in November, suggesting the central bank will be in no hurry to raise interest rates.

Inflation cooled as gasoline prices tumbled, bringing the rate in line with the Bank of Canada's target level. The annualized rate pulled back to 2.0 percent from October's strong 2.4 percent, falling short of economists' forecasts for 2.2 percent.

The Bank of Canada aims to keep inflation at 2 percent, the midpoint of its 1 to 3 per cent target range.

"We've seen the Canadian dollar weaken off on the back of it, just as it feeds directly into the Bank of Canada (rate) decision," said Camilla Sutton, chief currency strategist at Scotiabank.

"What it does do is it allows them plenty of room to be flexible and patient as they look to hiking rates."

A Reuters poll last month showed the Bank of Canada was expected to defer an interest rate hike until late next year despite high household debt.

The Canadian dollar weakened as low as C$1.1635 to the U.S dollar, or 85.95 U.S. cents, after the data on Friday, weaker than Thursday's finish of C$1.1597, or 86.23 U.S. cents.

Canadian government bond prices were mostly stronger. The two-year bond rose 2 Canadian cents to yield 1.01 percent, while the benchmark 10-year bond rose 24 Canadian cents to yield 1.84 percent.

(Reporting by Solarina Ho and Jeffrey Hodgson; Editing by Peter Galloway)