CANADA FX DEBT-C$ touches 1-week low as U.S. data boosts greenback

Reuters

* Canadian dollar at C$1.0943, or 91.38 U.S. cents * Bond prices mostly lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Aug 19 (Reuters) - The Canadian dollar weakened against the greenback on Tuesday to its lowest level in a week as encouraging economic data south of the border prompted investors to pick up the U.S. currency, to the detriment of the loonie.

Despite some sizeable day-to-day swings, the loonie has mostly moved sideways since the end of July. While analysts expect the currency could consolidate around the C$1.09 level for now, it is seen weakening further before long, partly due to an improving U.S. economy.

Data on Tuesday supported that view as housing starts and building permits surged in July, while consumer prices rose only modestly. The reports gave the U.S. dollar a 0.4 percent boost against a basket of currencies.

Some profit-taking from long Canadian dollar investors helped accelerate the initial move lower, said Gareth Sylvester, director at Klarity FX in San Francisco.

"The size of the moves have been significant on an intraday basis, but taking a step back, we haven't broken through any key trend-defining levels at this stage," Sylvester said.

"We'd need to see a close above the C$1.0960 area to really open up the pair for a test toward C$1.1030." The Canadian dollar ended the North American session at C$1.0943 to the greenback, or 91.38 U.S. cents, weaker than Monday's close of C$1.0886, or 91.86 U.S. cents.

The loonie saw little benefit from renewed risk appetite in other financial markets as concerns over geopolitical tensions between Ukraine and Russia eased.

"The market is very comfortable with the geopolitical risks out there right now, they seem to have been pushed to the back burner," said Sylvester.

The next economic catalyst for the Canadian dollar does not come until Friday, when reports on inflation and retail sales will be released. Investors will also be watching for any monetary policy news that comes out of the annual gathering of central bankers and economists in Jackson Hole, Wyoming, at the end of the week.

Canadian government bond prices were mostly lower across the maturity curve, though the two-year was unchanged to yield 1.073 percent. The benchmark 10-year was off 8 Canadian cents to yield 2.074 percent.

(Editing by Meredith Mazzilli)

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