CANADA FX DEBT-Canadian dollar gains for fifth straight month as threat to trade talks fades

By Fergal Smith

TORONTO, June 30 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday, recouping all the ground it lost in a volatile pre-weekend move as trade negotiations between the U.S. and Canada resumed.

The loonie CAD= was trading 0.3% higher at 1.3635 per U.S. dollar, or 73.34 U.S. cents, extending its recovery from an intraday low of 1.3758 on Friday.

For June, the currency was up 0.8%. That's its fifth straight month of gains, the longest such stretch since 2020.

The United States will resume trade negotiations with Canada immediately after Ottawa scrapped its digital services tax targeting U.S. technology firms, White House economic adviser Kevin Hassett said. On Friday, U.S. President Donald Trump had said that the U.S. was immediately ending trade talks with Canada in response to the digital levy.

"Anyone who sold the Canadian dollar on Friday learned another tough lesson that Trump headlines are to be faded," said Adam Button, chief currency analyst at ForexLive. "The market is increasingly eager to buy the dip on any opportunity and that includes selling the (U.S.) dollar."

The U.S. dollar .DXY declined against a basket of major currencies as markets considered the prospect of a ballooning U.S. government deficit and the potential for trade deals with major trading partners.

The price of oil, one of Canada's major exports, was trading 0.8% lower at $65.00 a barrel as investors weighed easing Middle East risk and prospects of an OPEC+ output increase in August.

Canadian bond yields were mixed across a flatter curve, with the 10-year CA10YT=RR down 3.4 basis points at 3.274%. It was an early close for the bond market ahead of the Canada Day holiday on Tuesday.