CANADA FX DEBT-Canadian dollar adds to weekly decline as US tariff threat increases

By Fergal Smith

TORONTO, July 11 (Reuters) - The Canadian dollar hit a two-week low against its U.S. counterpart on Friday as U.S. President Donald Trump ramped up his tariff assault on Canada, but the move was limited after domestic jobs data raised expectations that the Bank of Canada would remain on hold this month.

The loonie CAD= was trading 0.2% lower at 1.3685 per U.S. dollar, or 73.07 U.S. cents, after touching its weakest intraday level since June 27 at 1.3731. For the week, the currency was on track to decline 0.6%.

Canada's economy added 83,100 jobs in June, beating expectations for a flat reading, and the unemployment rate surprisingly fell to 6.9% from 7% in May.

"Given what's happened this year, the Canadian economy is performing better than almost anyone thought it would be," said Adam Button, chief currency analyst at ForexLive.

"The Canadian jobs report isn't quite as strong as it first appears but it's certainly solid and it will sideline the Bank of Canada for several months at a minimum."

Investors see an 83% chance the BoC leaves its benchmark interest rate unchanged at 2.75% at a policy decision on July 30, up from 73% before the data. 0#CADIRPR

Trump said on Thursday that the U.S. would impose a 35% tariff on imports from Canada which would go into effect on August 1. While that is up from the current 25% rate, an exclusion for goods covered by a continental trade pact, the United States-Mexico-Canada Agreement was expected to stay in place.

The price of oil CLc1, one of Canada's major exports, rose 2.6% to $68.31 a barrel, clawing back nearly all of the previous day's decline.

Canadian bond yields moved higher across a steeper curve. The 10-year CA10YT=RR was up 9.3 basis points at 3.502%, its highest level since January 15.