CANADA FX DEBT-Canadian dollar steadies near three-week high as investor sentiment rises

By Fergal Smith

TORONTO, July 23 (Reuters) - The Canadian dollar was barely changed against its U.S. counterpart on Wednesday, with the commodity-linked currency holding near an earlier three-week high as investors weighed prospects of additional trade deals that could improve the global economic outlook.

The loonie CAD= was trading nearly unchanged at 1.3604 per U.S. dollar, or 73.51 U.S. cents, after earlier touching its strongest intraday level since July 4 at 1.3576.

"There has been very little CAD related news so it's moving along with the USD Index and general risk sentiment," said Amo Sahota, director at Klarity FX in San Francisco. "Traders will want to hear on trade deals with other major economies."

Wall Street's main indexes moved higher after a Financial Times report that the EU and the United States were closing in on a trade deal, similar to the agreement U.S. President Donald Trump struck with Japan.

The U.S. dollar .DXY edged lower for a fourth straight day against a basket of major currencies and the price of oil CLc1, one of Canada's major exports, settled 0.1% lower at $65.25 a barrel.

Canadian retail sales data for May, due on Thursday, could offer clues on the hit from tariffs to the domestic economy. Economists forecast a monthly decline of 1.1%.

Still, investors expect the Bank of Canada to keep its benchmark interest rate on hold at 2.75% at a policy decision next Wednesday, after recent data showed underlying inflation remaining well above target.

"The potential of a BoC rate cut next week is slim so CAD traders are feeling somewhat passive on domestic drivers at the moment," Sahota said.

Canadian bond yields rose across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 5.4 basis points at 3.557%.