(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar dips 0.1% against the greenback
* Loonie pulls back from a one-week high at 1.2575
* Price of U.S. oil settles 4.2% higher
* Canada's 10-year yield matches last Friday's 13-month high
By Fergal Smith
TORONTO, March 4 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Thursday, pulling back from an
earlier one-week high as a sell-off on Wall Street driven by
higher bond yields offset surging oil prices.
The safe-haven U.S. dollar rallied against a basket
of major currencies and Wall Street slumped after remarks from
Federal Reserve Chair Jerome Powell disappointed investors
worried about rising longer-term U.S. bond yields.
Canada runs a current account deficit and is a major
producer of commodities, including oil, so the loonie tends to
be sensitive to risk appetite.
U.S. crude oil futures settled 4.2% higher at $63.83 a
barrel after OPEC and its allies agreed to keep production
unchanged into April.
"Canadian dollar traders' heads were spinning today in
attempting to digest OPEC and Powell at the same time," said
Adam Button, chief currency analyst at ForexLive.
"The market has become preoccupied with higher yields and
until there is a sense of a ceiling, that's going to be the main
driver of all markets, including FX."
The Canadian dollar was trading 0.1% lower at 1.2661
to the greenback, or 78.98 U.S. cents, having touched its
strongest intraday level since last Thursday at 1.2575. Last
Thursday, it touched a three-year high at 1.2464.
Canadian dollar forecasts for the coming months have been
raised by strategists, reflecting recent gains for the currency
but also expectations that commodity prices will benefit from
the reopening of the global economy, a Reuters poll showed.
Canadian labor productivity fell 2.0% in the fourth quarter,
Statistics Canada said. Canada's international trade data for
January is due on Friday.
Canadian government bond yields were higher across a steeper
curve in tandem with U.S. Treasuries. The 10-year yield
matched last Friday's 13-month high of 1.501% before
dipping to 1.490%, up 7.4 basis points on the day.
(Reporting by Fergal Smith; Editing by Bernadette Baum and
Peter Cooney)
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