*

Canadian dollar falls 0.3% against the greenback

*

Trades in a range of 1.3764 to 1.3820

*

Price of US oil settles 1.7% lower

*

Bond yields ease across a flatter curve

By Fergal Smith

TORONTO, May 7 (Reuters) - The Canadian dollar weakened

against its U.S. counterpart on Wednesday as oil prices fell and

investors weighed the Federal Reserve's patient stance on

cutting interest rates.

The loonie was trading 0.3% lower at 1.3915 per U.S.

dollar, or 72.39 U.S. cents, after moving in a range of 1.3764

to 1.3820.

The Fed held interest rates steady, as expected, but said the

risks of higher inflation and unemployment had risen, further

clouding the economic outlook as the U.S. central bank grapples

with the impact of Trump administration tariff policies.

"The Fed still appears to be prioritizing guarding its

inflation mandate to ensure longer-term inflation expectations

remain well-anchored," Scott Anderson, chief U.S. economist at

BMO Capital Markets, said in a note.

"This raises the risk that the Fed will be a little late to

cutting rates to forestall a deeper slowdown in the

economy."

The U.S. dollar strengthened against a basket of major

currencies, but its gains were capped by uncertainty over

upcoming trade negotiations, including expected U.S.-China talks

this weekend.

The price of oil, one of Canada's major exports, gave up some of

the previous day's sharp gains. U.S. crude futures settled 1.7%

lower at $58.07 a barrel.

Canadian employment data for April, due on Friday, could

offer clues on the strength of the domestic economy. The median

forecast is for a modest gain of 2,500 jobs, while the

unemployment rate is expected to edge up to 6.8% from 6.7% in

March.

Investors see a roughly 50% chance that the Bank of Canada

will cut interest rates by 25 basis points in June after pausing

its easing campaign last month.

Canadian bond yields moved lower across a flatter curve,

tracking moves in U.S. Treasuries. The 10-year was

down 4.2 basis points at 3.108%.