C$ weakens as investors eye additional Fed rate hikes



* Canadian dollar weakens 0.4% against the greenback

* Trades in a range of 1.2828 to 1.2936

* Price of U.S. oil settles 1.8% higher

* Canadian bond yields rise across curve

By Fergal Smith

TORONTO, Aug 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Wednesday as investors digested minutes from the latest Federal Reserve policy meeting and awaited domestic retail sales data due at the end of the week.

U.S. stocks pared losses but remained lower on the day as Fed officials saw "little evidence" late last month that U.S. inflation pressures were easing, and steeled themselves to force the economy to slow down as much as needed to control the surge in prices.

Canada sends about 75% of its exports to the United States.

"The loonie weakened in anticipation of the FOMC minutes," said Amo Sahota, director at Klarity FX in San Francisco. "It's clear that the Fed will continue to tighten."

The Canadian dollar CAD= was trading 0.4% lower at 1.29 to the greenback, or 77.52 U.S. cents, giving back nearly all of the previous day's gain. It traded in a range of 1.2828 to 1.2936.

The loonie had rallied on Tuesday after domestic data showed rising underlying inflation pressures.

Canadian retail sales data, due on Friday, could offer further clues on the strength of the domestic economy. Data earlier in August showed that Canada shed jobs for a second straight month in July.

"The softer Canadian labor report will be weighing on the mind of traders ahead of Friday's retail sales report to see if consumers are paring back spending," Sahota said.

The price of oil, one of Canada's major exports, recovered from a six-month low after a steeper-than-expected drawdown in U.S. crude stocks. U.S. crude oil futures CLc1 settled 1.8% higher at $88.11 a barrel.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year CA10YT=RR touched its highest since July 25 at 2.890% before dipping to 2.848%, up 9.5 basis points on the day.
Reporting by Fergal Smith; Editing by David Holmes and Alistair Bell

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