CANADA FX DEBT-Canadian dollar edges higher as oil rises for fifth straight day

By Fergal Smith

TORONTO, Jan 14 (Reuters) - The Canadian dollar strengthened slightly against its U.S. counterpart on Wednesday as oil prices rose and investors awaited domestic housing data.

The loonie CAD= was trading 0.1% higher at 1.3875 per U.S. dollar, or 74.21 U.S. cents, after trading in a range of 1.3867 to 1.3898. On Friday, the currency touched a five-week low at 1.3920.

"The recovery in oil prices is important and is offering the CAD some fundamental support. Interest rate differentials are also showing signs of a turn," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.

The price of oil, one of Canada's major exports, rose for a fifth straight day on fears of Iranian supply disruptions due to a potential U.S. attack on Iran and possible retaliation against U.S. regional interests. U.S. crude futures CLc1 were up 1.3% at $61.92 a barrel.

The Canadian 2-year yield was trading 97 basis points below its U.S. equivalent after touching the widest gap in five weeks on Friday at 99 basis points.

"Near-term domestic risk appears to be limited ahead of Thursday's existing home sales and manufacturing sales data," the Scotiabank strategists said.

The home sales data on Thursday will cover the month of December. Data for November showed home sales were down 10.7% on an annual basis as households contended with the economic shock of a trade war.

Canadian Prime Minister Mark Carney has vowed to reduce the economy's reliance on exports to the U.S. market. He arrived in Beijing on Wednesday in the first visit to China by a Canadian prime minister since 2017.

Canadian bond yields eased across a flatter curve as Wall Street slid and investors weighed U.S. retail sales and producer price data. The 10-year CA10YT=RR was down 4.4 basis points at 3.365%, its lowest level since December 5.