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Canadian dollar gains 0.1% against the greenback

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Touches its strongest level since October 8 at 1.3635

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Price of US oil settles 0.8% higher

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Bond yields rise across the curve

By Fergal Smith

TORONTO, June 5 (Reuters) - The Canadian dollar

strengthened to nearly an eight-month high against its U.S.

counterpart on Thursday as investors shrugged off a record

Canadian trade deficit and the greenback oscillated against

major peers.

The loonie was trading 0.1% higher at 1.3665 to the

U.S. dollar, or 73.18 U.S. cents, after touching its strongest

intraday level since October 8 at 1.3635.

"Broader USD flows have been the bigger driver for the

Canadian dollar today," said Erik Bregar, director of FX &

precious metals risk management at Silver Gold Bull, adding that

optimism on U.S.-China trade talks helped the greenback claw

back some of its earlier declines.

U.S. President Donald Trump and Chinese leader Xi Jinping

confronted weeks of brewing trade tensions and a battle over

critical minerals in a rare leader-to-leader call that left key

issues to further talks.

The U.S. dollar slipped against the euro after the

European Central Bank hinted at a pause in its year-long policy

easing cycle and U.S. data pointed to softening labor market

conditions amid mounting economic headwinds from tariffs.

Canada's trade deficit in April widened to an all-time high of

C$7.1 billion ($5.2 billion) as U.S. tariffs sucked out demand

for Canadian goods from the U.S.

Still, Bank of Canada Deputy Governor Sharon Kozicki said

Canadian firms and industry associations affected by trade

tensions are less worried about a worst-case scenario involving

U.S. tariffs and are set to raise prices.

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

0.8% higher at $63.37 a barrel, while Canadian bond yields moved

higher across the curve, tracking moves in U.S. Treasuries.

The 10-year was up 1.7 basis points at 3.253%.