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Canadian dollar dips 0.2% against the greenback

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Touches its weakest since July 18 at 1.3742

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Price of oil settles 2.4% higher

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Bond yields edge up across the curve

By Fergal Smith

TORONTO, July 28 (Reuters) - The Canadian dollar

weakened to a 10-day low against its U.S. counterpart on Monday

but its decline, ahead of a Bank of Canada interest rate

decision this week, was the smallest by far among the Group of

10 currencies.

The loonie was trading 0.2% lower at 1.3730 per U.S.

dollar, or 72.83 U.S. cents, after touching its weakest intraday

level since July 18 at 1.3742.

The U.S. dollar jumped 1% against a basket of major

currencies after the U.S. and the EU struck a framework trade

pact, the latest in a flurry of deals to avert a global trade

war.

"It's mostly a broad-based (U.S.) dollar recovery story that

began earlier in July," said Marc Chandler, chief market

strategist at Bannockburn Global Forex LLC.

"It's a technical correction supported by higher U.S.

interest rates here in July. I think it's got a little bit more

room to run, but what concerns me is that the big events this

week are still ahead of us."

Both the Federal Reserve and the Bank of Canada are due to

make interest rate decisions on Wednesday.

The BoC is likely to keep its benchmark rate unchanged at 2.75%

for the third straight meeting, economists and market analysts

predict, as firm core inflation and robust job growth offset

trade uncertainty.

Talks between Canada and the United States on a trade deal

are at an intense phase, Prime Minister Mark Carney told

reporters, reiterating that an agreement without any tariffs at

all was unlikely.

Canada sends about 75% of its exports to the U.S., including oil

which settled 2.4% higher at $66.71 a barrel.

Canadian bond yields edged higher across the curve. The

10-year was up one basis point at 3.535%.

(Reporting by Fergal Smith; Editing by Chizu Nomiyama )