CANADA FX DEBT-C$ steadies after notching 3-week high on domestic job gains

    * Canadian dollar at C$1.3132, or 76.15 U.S. cents
    * Canada adds 31,800 jobs in June
    * Price of U.S. oil falls 0.9 percent
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, July 6 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday, pulling back
from an earlier three-week high, as data showing a
stronger-than-expected rise in domestic jobs supported
expectations for a Bank of Canada interest rate hike next week.
    At 9:23 a.m. EDT (1323 GMT), the Canadian dollar         
was trading nearly unchanged at C$1.3132 to the greenback, or
76.15 U.S. cents. The currency touched its strongest since June
14 at C$1.3088.
    The Canadian economy added 31,800 jobs in June, more than
the 24,000 gain that analysts had predicted.             
    Chances of a Bank of Canada interest rate hike at the July
11 announcement were little changed after the data at about 85
percent, the overnight index swaps market indicated.           
    "The market was already pricing a rate hike so the number
this morning doesn't change that view," said Paul-Andre
Pinsonnault, senior fixed income economist at National Bank
    "The big question for us remains will we get any escalation
in the trade war between the U.S. and China over the weekend and
early next week that could blow things apart."
    The United States and China slapped tit-for-tat duties on
$34 billion worth of each other's imports on Friday.
    Canada runs a current account deficit so its economy could
be hurt if the flow of trade or capital slows. The country has
its own trade feud with the United States and is also in
slow-moving talks with the U.S. and Mexico to revamp the North
American Free Trade Agreement.
    The loonie will climb over the coming year, a Reuters poll
showed, but forecasters are less bullish than they were a month
ago as escalating trade uncertainty competes with expected Bank
of Canada rate hikes.             
    Separately, Statscan said Canada's trade deficit in May grew
to C$2.77 billion from C$1.86 billion in April on a sharp rise
in imports of airliners and gasoline while exports edged down.
    The price of oil, one of Canada's major exports, was
pressured by higher Saudi production and trade tensions. U.S.
crude        prices were down 0.9 percent at $72.28 a
    The U.S. dollar        fell after data showed the U.S.
economy created more jobs than expected in June, but a closely
watched inflation gauge rose less than forecast.                
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 20 Canadian
cents to yield 2.124 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)