CANADA FX DEBT-C$ hits 2-week low as global growth worry offsets BoC

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar dips 0.4% against greenback * Touches weakest level since Aug. 23 at 1.2761 * Bank of Canada leaves key interest rate unchanged at 0.25% * Canadian bond yields ease across a flatter curve By Fergal Smith TORONTO, Sept 8 (Reuters) – The Canadian dollar fell to its weakest level in more than two weeks against the greenback on Wednesday, pressured by worries that the global economic outlook is deteriorating even as the Bank of Canada looked past a soft patch in the domestic economy. Wall Street dipped on concerns that the spread of the Delta variant of the coronavirus could slow economic growth. “Growth forecasts globally are being revised lower while at the same time inflation is now expected to potentially settle at a higher level,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets. “That’s a challenging backdrop for risk assets and also for cyclical currencies, including the Canadian dollar.” The loonie was trading 0.4% lower at 1.27 to the greenback, or 78.74 U.S. cents, after touching its weakest intraday level since Aug. 23 at 1.2761. “It’s really driven by what we are seeing with respect to the U.S. dollar and macro factors predominantly as opposed to anything with respect to the Bank of Canada or the upcoming election,” Rai said. The Bank of Canada left its key interest rate unchanged at a record low 0.25%, as expected. It expected the economy to strengthen in the second half of 2021 after shrinking in the second quarter, although a fourth wave of COVID-19 infections and ongoing supply bottlenecks could weigh on the recovery. Canada’s federal election race is so close that even a few swing districts on the western Prairies, a region usually hostile to Prime Minister Justin Trudeau’s Liberals, may be key to his hopes to stay in power, analysts say. Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year eased 2.2 basis points to 1.210%. (Reporting by Fergal Smith Editing by Paul Simao and Bernadette Baum)