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Canadian dollar weakens 0.6% against the greenback

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For the week, the loonie loses 0.5%

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Retail sales fall 0.3% in January

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10-year yield eases 7 basis points to 3.447%

By Fergal Smith

TORONTO, March 22 (Reuters) - The Canadian dollar fell

against its broadly stronger U.S. counterpart on Friday,

registering a weekly decline, as domestic retail sales data

added to evidence of an economic slowdown that could spur

interest rate cuts.

The loonie was trading 0.6% lower at 1.3605 to the

U.S. dollar, or 73.50 U.S. cents, stopping just short of its

weakest level in three months which it posted on Tuesday at

1.3613. For the week, the currency was down 0.5%.

Canadian retail sales fell 0.3% in January from December.

Sales volume rose 0.2%, while a preliminary estimate showed them

up 0.1% in February.

"This morning's retail sales number was better than

expected, but remained consistent with the evaporation in

domestic consumer demand that has been sapping the Canadian

economy's momentum for months," said Karl Schamotta, chief

market strategist at Corpay.

"The Bank of Canada will remain alert to the risk of a

repeat of last year's melt-up in housing markets, but otherwise

seems destined to begin cutting rates at the June meeting."

Money markets have raised bets on the BoC easing rates in

June, seeing a roughly 70% chance, after data on Tuesday showed

inflation cooling to an annual rate of 2.8%.

The U.S. dollar headed for a second week of gains

against a basket of major currencies after a surprise rate cut

in Switzerland highlighted the gap in monetary policy between

the Federal Reserve and major peers.

"Decisions in the rest of the world this week saw central

banks moving in a uniformly-dovish direction, and the Federal

Reserve's 'dot plot' bore the imprint of a hawkish tilt in

medium- and long-term rate expectations," Schamotta said.

Canadian bond yields moved lower across the curve, tracking

U.S. Treasuries. The 10-year was down 7 basis points

at 3.447%.