CANADA FX DEBT-C$ slides as oil prices fall, CPI and NAFTA in focus

    * Canadian dollar at C$1.2726, or 78.58 U.S. cents
    * Bond prices lower across steeper yield curve

    By Solarina Ho
    TORONTO, Aug 14 (Reuters) - The Canadian dollar softened on
Monday against a stronger greenback as the U.S. dollar's rebound
and demand worries from China pressured crude prices.
    Prices of oil, a major Canadian export, fell sharply as a
slowdown in Chinese refining raised concerns about demand for
crude in Asia's largest economy.
    U.S. crude        prices settled down 2.5 percent at $47.59
a barrel.      
    The U.S. dollar        rose broadly as traders unwound
bearish bets against the greenback following last week's
escalation of tensions between the United States and North Korea
as well as underwhelming economic data.       
    Risk-sensitive assets, such as stocks, rallied as U.S.
officials played down the risk of an imminent war.            
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.2726 to the greenback, or 78.58 U.S. cents, down
0.4 percent.
    On Friday, the loonie touched its weakest level in four
weeks at C$1.2753 before recouping losses. The currency traded
on Monday in a range between C$1.2675 and C$1.2731.
    Canada's dollar "has seen its best levels of 2017," said
Brad Schruder, director of corporate sales and structuring at
BMO Capital Markets.
    "I think should you see this move down into the C$1.26s,
that buyers of USD/CAD would be guided to scoop some
    For the week ahead, investors are awaiting Canada's
inflation data for July on Friday to see whether the numbers
will support a potential second rate hike from the Bank of
Canada later this year.
    Negotiations for modernizing the North American Free Trade
Agreement (NAFTA) start on Wednesday. The Canadian government's
goals in the talks include preserving NAFTA's dispute-settlement
mechanism, Foreign Minister Chrystia Freeland said, setting up a
potential clash with Washington.                 
    Canadian government bond prices were lower across the
maturity curve, with the two-year            price down 3
Canadian cents to yield 1.227 percent and the benchmark 10-year
            falling 23 Canadian cents to yield 1.879 percent.

 (Reporting by Solarina Ho, additional reporting by Fergal
Smith, editing by G Crosse)