CANADA FX DEBT-C$ edges higher as recent upbeat data help underpin

(Adds analyst quotes and details on background and CFTC data
and updates prices)
    * Canadian dollar ends at C$1.3126, or 76.18 U.S. cents
    * Bond prices lower across a steeper yield curve

    By Fergal Smith
    TORONTO, Jan 13 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Friday even as oil prices fell,
with recent upbeat domestic data helping to underpin the
currency ahead of a Bank of Canada interest rate decision next
    As recently as October the central bank said it had
considered easing interest rates as it downgraded its economic
outlook. But data last week showed a surge in jobs in December
and the first trade surplus in more than two years in November,
while a Bank of Canada survey this week pointed to improving
business conditions.
    Together with recent strengthening of commodity prices and
improved global data it may tilt the Bank of Canada's
communication toward more optimism, said Michael Goshko,
corporate risk manager at Western Union Business Solutions.
    "With the Canadian dollar in a pretty firm strengthening
trend, perhaps that could add fuel to that trend."
    The Canadian dollar ended at C$1.3126 to the
greenback, or 76.18 U.S. cents, slightly stronger than
Thursday's close of C$1.3132, or 76.15 U.S. cents.
    The currency's strongest level of the session was C$1.3111,
while its weakest was C$1.3168.
    For the week, the loonie rose 0.8 percent. It touched on
Thursday a near 3-month high at C$1.3028.    
    "Importers have been pretty busy" since the start of the
year as the stronger loonie helped them buy cheaper U.S.
dollars, Goshko said.
    Meanwhile, speculators have raised bearish bets on the
Canadian dollar. Net short Canadian dollar positions rose to
7,935 contracts as of Jan. 10 from 3,871 a week earlier, data
from the Commodity Futures Trading Commission and Reuters
calculations showed.
    Prices of oil, one of Canada's major exports, fell on
lingering doubts over the extent of OPEC cuts, with sentiment
worsened by concerns over the economic health of China after it
reported the steepest falls in overall exports since 2009. 
    U.S. crude oil futures settled 64 cents lower at
$52.37 a barrel.
    The U.S. dollar dipped against a basket of major
currencies, although some losses were pared after data showed
U.S. retail sales rose solidly in December.    
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries, pressured by data
supporting the notion of a steady U.S. economic expansion and
rising Wall Street stock prices.
    The two-year bond fell 4.5 Canadian cents to
yield 0.797 percent and the 10-year declined 38
Canadian cents to yield 1.711 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Tom