CANADA FX DEBT-Canadian dollar hits three-week low on broad-based USD strength

By Fergal Smith

TORONTO, May 8 (Reuters) - The Canadian dollar fell to a three-week low against its U.S. counterpart on Thursday as the Federal Reserve's patient stance on easing boosted the greenback and after the Bank of Canada said a lengthy trade war could put financial stability at risk.

The loonie CAD= was trading 0.7% lower at 1.3930 per U.S. dollar, or 71.79 U.S. cents, after touching its weakest intraday level since April 16 at 1.3930.

Fed Chair Jerome Powell on Wednesday signaled that the central bank was effectively sidelined until the Trump administration's sweeping policy agenda takes full effect.

"The CAD weakness today is in line with broad USD strength after a relatively hawkish Fed meeting yesterday," said Jayati Bharadwaj, a global FX strategist at TD Securities. "Powell signaled caution and no hurry to resume the easing cycle."

The U.S. dollar gained against a basket of major currencies, with market nerves calmed by news of a trade deal between the United States and Britain.

Canada sends about 75% of its exports to the United States, including oil. U.S. crude futures CLc1 were up 3.1% at $59.87 a barrel on hopes for a breakthrough in looming trade talks between the U.S. and China.

A prolonged trade war could increase the risks to Canadian financial stability by hurting banks and other institutions and making it harder for households and businesses to pay down debt, the BoC said.

Canadian employment data for April, due on Friday, could shed light on the trade war's impact on the domestic economy. The median forecast is for a modest jobs gain of 2,500 and for the unemployment rate to edge up to 6.8% from 6.7% in March.

Canadian bond yields rose across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 10 basis points at 3.200%.