CANADA FX DEBT-Canadian dollar notches second straight weekly gain on US tariff delays

By Fergal Smith

TORONTO, Feb 14 (Reuters) - The Canadian dollar edged up to a two-month high against its U.S. counterpart on Friday as investors grew skeptical that the trade tariffs threatened by U.S. President Donald Trump would be as severe as first thought.

The loonie CAD= was trading 0.1% higher at 1.4170 per U.S. dollar, or 70.57 U.S. cents, after touching its strongest intraday level since December 12 at 1.4152. For the week, the currency strengthened 0.9%, its second straight weekly gain.

"Markets braced yesterday for what President Trump called ‘the big one’, referring to reciprocal tariffs. To their relief, what was delivered was vague and delayed until early April, after studies are completed," said Michael Goshko, senior market analyst at Convera Canada ULC.

"This has become a familiar pattern that Mr. Trump’s tariff bark is worse than his bite, resulting in stocks, bonds, and currencies rallying."

A directive signed by Trump on Thursday stopped short of imposing more tariffs, instead kicking off what could be weeks or months of investigation into the levies imposed on U.S. goods by other trading partners and then devising a response. Last week, Trump delayed a 25% tariff on goods from Mexico and Canada for a month until March 4.

The U.S. dollar .DXY lost ground against a basket of major currencies, weighed additionally by weaker-than-expected U.S. retail sales data.

Canadian data was mixed. Factory sales grew by 0.3% in December from November on higher sales of petroleum and coal products, as well as food products, while wholesale trade was down by 0.2%.

The price of oil CLc1, one of Canada's major exports, fell 0.5% to $70.95 a barrel as investors weighed the potential for a peace deal between Russia and Ukraine that would likely boost global energy supplies.

Canadian bond yields eased across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was down 2 basis points at 3.097%.

The bond market was set for an early close ahead of the Family Day holiday on Monday.