CANADA FX DEBT-Canadian dollar gains as investors eye potential repatriation flows

By Fergal Smith

TORONTO, April 8 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday as investors weighed the prospect of negotiations globally over U.S. trade tariffs and the potential return of Canadian investment flows from abroad.

The loonie CAD= was trading 0.3% higher at 1.4205 per U.S. dollar, or 70.40 U.S. cents, after moving in a range of 1.4145 to 1.4248.

Canada last week avoided new duties on its goods as the U.S. unveiled a 10% baseline tariff on all imports to the United States and higher targeted duties on some of the country's biggest trading partners.

The tariff exemption for goods that comply with the USMCA trade agreement between the United States, Mexico and Canada has helped the loonie outperform some major peers in recent days, said Mirza Baig, a foreign exchange strategist at Desjardins.

"Repatriation flows from Canadian investors may also have helped stabilize the CAD," Baig said.

Stock markets have tumbled this year on the prospect of U.S. trade tariffs upending the global economy. The latest month of Canadian portfolio flow data, for January, shows that domestic investors sold foreign equities at the fastest pace in nearly three years.

U.S. President Donald Trump said that he is waiting to hear from China before duties of more than 100% take effect but other administration officials said they would not prioritize negotiations with the world's No. 2 economic power.

Canadian economic activity expanded at a slower pace in March as employment declined and prices heated up, Ivey Purchasing Managers Index (PMI) data showed. The seasonally adjusted index fell to 51.3 last month from 55.3 in February.

Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 3.6 basis points at 3.095%.