January 26, 2017 / 2:32 PM / in 4 years

CANADA FX DEBT-C$ pulls back from 1-week high as greenback recovers

* Canadian dollar at C$1.3102, or 76.32 U.S. cents
    * Loonie touches its strongest since Jan. 18 at C$1.3054
    * Canadian bond prices mixed across the yield curve
    * 10-year yield hits its highest since Dec. 16 at 1.851

    TORONTO, Jan 26 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday, pulling back from a
one-week high earlier in the session as the greenback recovered
some lost ground against a basket of major currencies.
    The loonie had rallied this week as investor fears of a more
unfavorable trade outlook for Canada abated and after U.S.
President Donald Trump signed orders on Tuesday smoothing the
path for the Keystone XL oil pipeline.
    If constructed, Keystone would provide oil producers in
Canada with a quicker route to send crude to U.S. Gulf Coast
    But analysts and traders said the C$8 billion pipeline was
far from being a certainty. 
    The U.S. dollar rebounded after its worst run since
August as investors refocused on the chances of higher U.S.
inflation and growth. 
    At 9:16 a.m. ET (1416 GMT), the Canadian dollar was
trading at C$1.3102 to the greenback, or 76.32 U.S. cents,
weaker than Wednesday's close of C$1.3067, or 76.53 U.S.
    The currency's weakest level was C$1.3130, while it touched
its strongest since Jan. 18 at C$1.3054.
    Losses for the Canadian dollar came even as prices of oil,
one of Canada's major exports, rose. U.S. crude prices
were up 1.25 percent at $53.41 a barrel. 
    Canadian government bond prices were mixed across the yield
curve, with the two-year up 0.5 Canadian cent to
yield 0.815 percent and the 10-year rising 2
Canadian cents to yield 1.820 percent.
    The 10-year yield touched its highest since Dec. 16 at 1.851
percent as Wednesday's record highs on Wall Street reduced
demand for safe haven assets such as bonds.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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