(Adds strategist quotes and details throughout; updates prices) * Canadian dollar rises 0.2% against the greenback * Loonie falls 0.5% for the week * Price of U.S. oil drops 2.9% * Canada-U.S. 2-year spread hits narrowest in more than two weeks By Fergal Smith TORONTO, April 26 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Friday, following data that showed factors driving faster growth in the U.S. economy that are likely to be temporary. U.S. economic growth accelerated in the first quarter, but the burst in growth was driven by trade and the largest accumulation of unsold goods since 2015, factors that are likely to reverse in the coming quarters. "Really it is all about the market's response to the GDP numbers we got out of the U.S. this morning," said Eric Theoret, a currency strategist at Scotiabank. "It hasn't been much of a loonie related move so much as a U.S. dollar move." The U.S. dollar fell against a basket of currencies, while the price of oil, one of Canada's major exports, retreated from its strongest bull run in at least a year after U.S. President Donald Trump again pressured the Organization of the Petroleum Exporting Countries to raise crude production to ease gasoline prices. U.S. crude prices settled 2.9% lower at $63.30 a barrel. Speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of April 23, net short positions had fallen to 47,493 contracts after rising to the highest since January at 49,162 in the prior week. At 4:17 p.m. (2017 GMT), the Canadian dollar was trading 0.2% higher at 1.3458 to the greenback, or 74.31 U.S. cents. The currency, which on Wednesday touched a nearly four-month low at 1.3522, traded in a range of 1.3452 to 1.3498. Gains for the loonie came after Bank of Canada Governor Stephen Poloz said on Thursday that the central bank could start raising rates again "sometime down the road.". On Wednesday, the Bank of Canada held rates steady but took a more dovish stance than in recent releases, removing wording around the need for "future hikes," while lowering its growth forecasts for 2019. For the week, the loonie fell 0.5%. Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 1 Canadian cent to yield 1.545% and the 10-year climbed 17 Canadian cents to yield 1.687%. The gap between Canada's 2-year yield and its U.S. equivalent narrowed by 3.9 basis points to a spread of 74.1 basis points in favor of the U.S. bond, the narrowest since April 9. (Reporting by Fergal Smith; Editing by Steve Orlofsky and Marguerita Choy)
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