CANADA FX DEBT-Canadian dollar touches near seven-month high ahead of Carney-Trump meeting

By Fergal Smith

TORONTO, May 2 (Reuters) - The Canadian dollar strengthened to a near seven-month high against its U.S. counterpart on Friday, as a potential easing of global trade tensions boosted investor sentiment ahead of a meeting next week between Canadian Prime Minister Mark Carney and U.S. President Donald Trump.

The loonie CAD= was trading 0.4% higher at 1.38 per U.S. dollar, or 72.46 U.S. cents, after touching its strongest intraday level since October 17 at 1.3761. For the week, the currency was also up 0.4%.

Carney said he would be in Washington next Tuesday for what he expects will be "difficult but constructive" talks with Trump. Canada sends about 75% of its exports to the United States, including steel, aluminum and autos which have been hit with hefty U.S. duties.

"What the tariffs will mean to economic activity in Canada and the potential response from the Canadian government is weighing on the minds of traders," said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.

The Bank of Canada says that a long-lasting global trade war could trigger a significant recession in Canada. Carney's Liberal Party, which retained power in Monday's general election, has promised to cut taxes and increase spending on housing and infrastructure.

Signs of easing U.S.-China trade tensions gave Wall Street a boost, while the U.S. dollar .DXY lost ground against a basket of major currencies despite upbeat U.S. jobs data.

The price of oil CLc1, one of Canada's major exports, settled 1.6% lower at $58.29 a barrel as traders turned cautious ahead of an OPEC+ meeting to decide the group's output policy for June.

Canadian government bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 10 basis points at 3.202%.