CANADA FX DEBT-C$ pads weekly gain as factory sales rise

 (Adds analyst quotes, details on CFTC data, background and
updates prices)
    * Canadian dollar ends at C$1.3337, or 74.98 U.S. cents
    * Loonie rises 0.9 percent for the week
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, March 17 (Reuters) - The Canadian dollar edged
higher on Friday against its U.S. counterpart, padding this
week's gains as stronger-than-expected domestic manufacturing
data supported prospects of the Bank of Canada dropping its
cautious stance.
    Canadian manufacturing sales unexpectedly rose in January
for the third month in a row, driven by a gain in sales of
non-durable goods, including petroleum and coal products, data
from Statistics Canada showed.             
    The 0.6 percent gain beat expectations for a 0.2 percent
decline, while sales volumes were also solid, rising 0.7
    "The data in Canada is still pretty strong and people are
looking as to whether the Bank (of Canada) will adjust their
narrative, or sound a little bit less dovish," said Jimmy Jean,
senior economist at Desjardins. 
    For the week, the loonie rose 0.9 percent, helped by losses
for the greenback after the Federal Reserve's interest rate
decision on Wednesday.
    "They increased interest rates but I think they did still
indicate a very moderate pace for further increases in their
rate and I think the Canadian dollar did benefit from that
significantly," said Darren Richardson, senior corporate dealer
at CanadianForex.
    Stability this week for crude oil prices added to support
for the loonie, Richardson said.
    U.S. crude        prices settled 3 cents higher at $48.77 a
barrel, finishing the week with modest gains after tumbling 9
percent last week on concerns that an Organization of the
Petroleum Exporting Countries' production cut was failing to
reduce a global supply overhang.             
    Oil is one of Canada's major exports.       
    The Canadian dollar          ended at C$1.3337 to the
greenback, or 74.98 U.S. cents, slightly stronger than
Thursday's close of C$1.3347, or 74.92 U.S. cents.
    The currency traded in a range of C$1.3304 to C$1.3378. It
touched on Thursday its strongest in more than two weeks at
    Speculators cut bullish bets on the Canadian dollar for the
second straight week, data from the Commodity Futures Trading
Commission and Reuters calculations showed. Canadian dollar net
long positions fell to 21,458 contracts as of March 14 from
29,220 a week earlier.
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 2.5 Canadian cents
to yield 0.805 percent and the 10-year             rising 35
Canadian cents to yield 1.762 percent.
    The 10-year yield has pulled back from a 20-month high of
1.876 percent reached on Monday.  

 (Reporting by Fergal Smith; Editing by W Simon and Sandra