CANADA FX DEBT-Canadian dollar posts a 7-month high as Carney visits White House

By Fergal Smith

TORONTO, May 6 (Reuters) - The Canadian dollar rose to a near seven-month high against its U.S. counterpart on Tuesday as the greenback posted broad-based declines and investors assessed Canadian Prime Minister Mark Carney's visit to the White House for clues on trade policy.

U.S. President Donald Trump, whose tariff policy has rattled world markets, said he and Carney would discuss "tough points," an allusion to Trump's belief that the United States can do without Canadian products, a point that he made at length during an Oval Office conversation.

"The U.S. is not backing down on the tariffs with Canada," said Marc Chandler, chief market strategist at Bannockburn Global Forex LLC. "It's still going to be a tense trade relationship and Canada is going to diversify."

Canadian exports to the United States dropped 6.6% in March but the shortfall was largely compensated for by increased exports to the rest of the world, while the nation's trade deficit surprisingly narrowed to C$506 million ($366.34 million), data showed.

The loonie CAD= was trading 0.4% higher at 1.3775 per U.S. dollar, or 72.60 U.S. cents, after touching its strongest intraday level since October 17 at 1.3751.

"You've got a generally weak U.S. dollar and Canada is participating in it," Chandler said.

The U.S. dollar .DXY lost ground against a basket of major currencies amid market jitters over hoped-for U.S. trade deals, while the price of oil, one of Canada's major exports, recouped some recent declines on signs of higher demand in Europe and China.

U.S. crude oil futures CLc1 settled 3.4% higher at $59.09 a barrel.

Canadian government bond yields eased across a flatter curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was down 3.4 basis points at 3.155%.