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Loonie trades in a range of 1.3743 to 1.3781

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Canada-U.S. 2-year spread hits 75 basis points

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Price of U.S. oil settles 4 cents higher

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Canadian bond yields rise across the curve

By Fergal Smith

TORONTO, April 18 (Reuters) - The Canadian dollar

steadied against its U.S. counterpart on Thursday, with the

currency unable to sustain earlier gains as recent moves in

yield spreads counted against it.

The loonie was trading nearly unchanged at 1.3765 to

the U.S. dollar, or 72.65 U.S. cents, after trading in a range

of 1.3743 to 1.3781. On Tuesday, the currency hit a five-month

low at 1.3846.

"It's going to have a tough pathway to appreciate

meaningfully given the really wide (interest rate) spread

between the U.S. and Canada," said Amo Sahota, director at

Klarity FX in San Francisco. "It doesn't look like there's a

quick way for that to get compressed again."

The gap between Canada's 2-year yield and the U.S.

equivalent has widened to 75 basis points in favor of the U.S.

note from 45 basis points at the start of the month as investors

bet that the Bank of Canada would begin cutting interest rates

ahead of the Federal Reserve.

The price of oil, one of Canada's major exports, held near a

three-week low as investors weighed mixed U.S. economic data,

U.S. sanctions on Venezuela and Iran and easing tensions in the

Middle East. U.S. crude oil futures settled 4 cents

higher at $82.73 a barrel.

Canada's plan to raise taxes on the savings of wealthy

people and corporations is likely to hold back investment,

potentially adding to the productivity malaise that has held

back economic growth in recent years, say economists.

Canadian government bond yields moved higher across the

curve, tracking moves in U.S. Treasuries. The 10-year

was up 5.3 basis points at 3.754%.