CANADA FX DEBT-Canadian dollar touches one-month high on tariff reprieve bets

By Fergal Smith

TORONTO, March 26 (Reuters) - The Canadian dollar strengthened to a one-month high against its U.S. counterpart on Wednesday before paring some gains, as oil prices rose and investors weighed whether expected new U.S. tariffs would be as far-reaching as previously feared.

The loonie CAD= was trading 0.1% higher at 1.4260 per U.S. dollar, or 70.13 U.S. cents, after moving above its 100-day moving average for the first time since October. The currency touched its strongest intraday level since February 24 at 1.4236.

"Potential dialing back of the tariff rhetoric seems to be helping Canada," said Erik Nelson, a macro strategist at Wells Fargo Securities in London.

U.S. President Donald Trump is readying an announcement on auto levies as soon as Wednesday, Bloomberg News reported. On Monday, Trump said automobile tariffs are coming soon even as he indicated that not all of his threatened levies would be imposed on April 2 and some countries may get breaks.

Canadian Prime Minister Mark Carney said if the ruling Liberals won an April 28 election, his government would create a C$2 billion ($1.40 billion) fund to boost the auto sector's competitiveness.

Canada is a major exporter of autos and other goods, such as oil, to the United States.

The price of oil rose 1.2% to $69.84 a barrel, supported by government data showing U.S. crude oil and fuel inventories fell last week.

Canadian wholesale trade most likely rose 0.4% in February from January, largely driven by higher sales in the machinery, equipment and supplies subsector, a preliminary estimate showed.

Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 2 basis points at 3.100%, after earlier touching its highest level since February 24 at 3.142%.