CANADA FX DEBT-Canadian dollar holds on to weekly gain as U.S. inflation cools

By Fergal Smith

TORONTO, Feb 13 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Friday in choppy trading, but the currency held on to much of its weekly gain as signs of slowing U.S. inflation helped calm investor nerves.

The loonie CAD= was trading 0.1% lower at 1.3620 per U.S. dollar, or 73.42 U.S. cents, after moving in a range of 1.3594 to 1.3637. For the week, the currency was up 0.4% as the greenback posted broad-based declines.

U.S. stocks rose in volatile trading as U.S. consumer prices increased less than expected in January, raising bets the Federal Reserve would cut interest rates in the coming months, but a rout in tech shares amid renewed fears of AI-driven disruption capped gains.

"CAD just seems to be sensitive to those little bouts of risk-off," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull. "Everything is calming down a bit and so is the Canadian dollar."

Canada's consumer price index report for January, due on Tuesday, could help guide expectations for the Bank of Canada policy outlook. Economists expect the annual rate of inflation to hold steady at 2.4%.

The price of oil, one of Canada's major exports, settled 0.1% higher at $62.89 a barrel, recovering from an earlier dip on news that OPEC+ is leaning towards a resumption in production increases.

Canadian bond yields moved lower across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was down 3.2 basis points at 3.259%, after earlier touching its lowest level since December 4 at 3.234%.