CANADA FX DEBT-C$ inches up as greenback down broadly

 (Adds comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    July 16 (Reuters) - The Canadian dollar drifted higher
against the U.S. currency on Monday, benefiting from the
greenback's overall weakness, but the outlook remained tilted to
the downside amid global trade tensions with the United States
and the European Union.
    "This is mostly U.S.-dollar driven," said Mazen Issa, senior
FX strategist at TD Securities in New York. "It's also the
summer lull so we're seeing pretty much range-bound trading."
    In the afternoon session, the U.S. dollar was down 0.1
percent at C$1.3141          against the Canadian unit. So far
this year, the Canadian dollar has been down 4.3 percent against
what has been a resurgent greenback.
    The U.S. dollar-Canadian dollar currency pair, however, has
a short-term bearish technical outlook, drifting toward the
lower end of its recent range between the mid-C$1.3000 and
$1.3220 area. 
    Scotiabank in a research note said the pair's daily momentum
indicators are close to neutral and trend strength gauges are
currently muted.  
    Against other currencies, such as the euro and sterling, the
Canadian mostly underperformed on the day.
    The U.S. dollar was down 0.3 percent against a basket of
currencies at 94.490       , following a slight rebound in risk
    TD's Issa said the Canadian dollar's fundamental outlook
remained downbeat as global trade factors continued to weigh on
the currency, adding that the market has yet to fully price in
this risk for the Canadian currency.
    Last Friday, Italian Deputy Prime Minister Luigi Di Maio
said Italy will not ratify the European Union's free trade
agreement with Canada. The Comprehensive Economic and Trade
Agreement needs to be approved by all 28 EU member states to
take full effect.             
    Canada is also embroiled in its own trade dispute with the
United States amid protracted talks to revamp the North American
Free Trade Agreement. 
    The commodity-based Canadian dollar could also be subject to
price movements in the oil market, analysts said. U.S. crude
futures were down 4.6 percent at $67.72       , which should
keep a lid on the Canadian dollar's gains. 
    After the Bank of Canada raised interest rates last week,
investors are looking to this week's inflation and retail sales
data to gauge whether one more rate hike is possible this year. 
    TD's Issa said there's about a 60 to 65 percent chance of a
Canadian rate increase in December.  
    Meanwhile, Canadian government bond prices were lower across
much of the yield curve in sympathy with U.S. Treasuries.
    The two-year yield            was up at 1.932 percent, while
the 10-year             rose to 2.141 percent from 2.133 percent
late on Friday.

 (Reporting by Gertrude Chavez-Dreyfuss in New York
Editing by Susan Thomas and Sandra Maler)