C$ strengthens as trade surplus hits widest in 14 years

* Canadian dollar strengthens 0.2% against the greenback

* Trades in a range of 1.2981 to 1.3055

* Canada's trade surplus widens to C$5.3 billion in May

* Price of U.S. oil rises 2.5%

TORONTO, July 7 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rebounded and data showed Canada posting its widest trade surplus since August 2008.

Canada's trade surplus widened to C$5.3 billion ($4.1 billion) in May, as higher prices for energy products boosted exports and imports decreased.

The price of oil, one of Canada's major exports, rose after steep losses in the previous two sessions, as investors returned their focus to tight supply.

U.S. crude CLc1 prices rose 2.5% to $100.98 a barrel, while the Canadian dollar CAD= was trading 0.2% higher at 1.3016 to the greenback, or 76.83 U.S. cents. It traded in a range of 1.2981 to 1.3055.

Gains for the loonie came as the U.S. dollar .DXY gave back some recent gains against a basket of major currencies and gains in chipmakers lifted stocks.

That helped calm investors after hawkish Federal Reserve comments increased the likelihood of a hefty interest rate hike later this month and raised fears over how much this could slow the economy.

The Canadian dollar will gain less ground than previously thought over the coming year as the growing risk of a global economic slowdown bolsters demand for safe-haven currencies such as the U.S. dollar, a Reuters poll showed.

Canadian government bond yields were mixed across a flatter curve, with the 10-year CA10YT=RR down nearly one basis point at 3.183%.

The Bank of Canada is due to auction C$3 billion of 10-year bonds on behalf of Canada's government. The bidding deadline is at 12 p.m. ET (1600 GMT).

Canada's employment report for June, due on Friday, could help guide expectations for a supersized interest rate hike next week by the central bank.
Reporting by Fergal Smith; editing by Jonathan Oatis

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.