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Canadian dollar gains 0.1% against the greenback

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Trades in a range of 1.3960 to 1.4004

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Price of U.S. oil settles 2.4% lower

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Bond yields ease across the curve

By Fergal Smith

TORONTO, May 15 (Reuters) - The Canadian dollar

strengthened against its U.S. counterpart on Thursday as U.S.

economic data fueled speculation the Federal Reserve will resume

interest rate cuts in the coming months, but the loonie's gains

were limited as oil prices fell.

The loonie was trading 0.1% higher at 1.3970 per U.S.

dollar, or 71.58 U.S. cents, after trading in a range of 1.3960

to 1.4004.

"A couple of bond-friendly reports this morning suggests the

U.S. economy remained soft heading into the spring while

inflation moderated," Sal Guatieri, a senior economist at BMO

Capital Markets, said in a note.

"Should these trends persist, the Fed will likely judge that

any tariff-driven rise in inflation will be transitory, and

resume lowering rates this summer."

The U.S. dollar lost ground against a basket of major

currencies after data showed that U.S. retail sales growth

slowed sharply in April, with investors already apprehensive

over the economy's prospects in a trade war.

The price of oil, one of Canada's major exports,

settled 2.4% lower at $61.62 a barrel on expectations for a

U.S.-Iran nuclear deal that could result in sanctions being

eased and more barrels released onto the global market.

Canadian housing data for April was mixed. Housing starts

jumped 30% in April but home sales were unable to rebound

following recent weakness.

Separate data, for March, showed manufacturing sales down

1.4% and wholesale trade growing by 0.2%.

Canadian bond yields moved lower across the curve, tracking

moves in U.S. Treasuries. The 10-year was down 10.5

basis points at 3.157%.