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Loonie touches a 2-week high at 1.4266

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Canada posts first trade surplus in 10 months

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Price of U.S. oil settles 2.3% lower

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Bond yields ease across the curve

By Fergal Smith

TORONTO, Feb 5 (Reuters) - The Canadian dollar steadied

near a two-week high against its U.S. counterpart on Wednesday

as data showed Canada's trade balance shifting into surplus,

with the currency holding on to its gains since Canada won a

reprieve from U.S. trade tariffs.

The loonie was trading nearly unchanged at 1.4320 per

U.S. dollar, or 69.83 U.S. cents, after touching its strongest

intraday level since January 20 at 1.4266.

"Tariff worries are easing - for now, at least - which is

allowing the CAD to stabilize," Shaun Osborne, chief currency

strategist at Scotiabank, said in a note.

"Unless trade talks deteriorate significantly again, there

is a chance that the USD-CAD peak reached Monday near 1.48 will

represent a significant high-water mark for spot."

The Canadian currency touched a 22-year low on Monday at

1.4793 before news of a 30-day pause on U.S. tariffs on Canadian

imports which had been due to take effect on Tuesday.

The U.S. dollar fell to its lowest in more than a

week against a basket of major currencies as investor nerves

about a global trade war abated.

Canada in December posted its first trade surplus in 10

months as exports expanded faster than imports, helped by a push

by U.S. businesses to build up inventory ahead of potential

tariffs.

S&P Global's Canada services PMI data was more downbeat. It

showed the services economy deteriorating for the second

straight month in January as uncertainty generated by the threat

of tariffs offset lower borrowing costs.

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

settled 2.3% lower at $71.03 a barrel as a large build in U.S.

crude and gasoline stockpiles signaled weaker demand.

Canadian bond yields fell across the curve. The 10-year

was down 6.4 basis points at 2.949%, moving closer

to a 4-1/2-month low it touched on Monday.