CANADA FX DEBT-C$ dips but on track to post biggest weekly gain in 3 months

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* Canadian dollar falls to 1.3037 to the greenback

* Loonie on track to rise 1 percent for the week

* Price of U.S. oil rises 0.6 percent

* Bond prices move lower across much of a steeper yield curve

TORONTO, Sept 14 (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Friday as the greenback rose broadly, but the loonie was on course for its best weekly performance in nearly three months.

At 3:54 p.m. (1954 GMT), the Canadian dollar was

trading 0.3 percent lower at 1.3037 to the greenback, or 76.70 U.S. cents. The currency, which on Thursday touched its strongest in two weeks at 1.2976, traded in a range of 1.2984 to 1.3053. “Generally firmer” U.S. data and a lack of domestic impetus weighed on the loonie, said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets.

The U.S. dollar rose against a basket of currencies,

rebounding from a near 1-1/2-month low, as upbeat U.S. economic data and higher Treasury yields rekindled some investor appetite for the greenback. The decline for the loonie came as U.S. President Donald Trump instructed aides to proceed with tariffs on about $200 billion of Chinese products. Canada exports many commodities and runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows. Still, the loonie has been boosted this week by higher oil prices and optimism that a deal to renew the North American Free Trade Agreement will be reached. It has climbed 1 percent since the start of the week, the most since late June. U.S. House of Representatives Democratic Leader Nancy Pelosi warned the Trump administration that NAFTA should be maintained as a trilateral pact between the United States, Mexico and Canada and not just as a U.S.-Mexico arrangement. The price of oil, one of Canada’s major exports, was supported by worries of more sanctions on Iran. U.S. crude oil

futures settled 0.6 percent higher at $68.99 a barrel.

Speculators have raised bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Sept. 11, net short positions had increased to 26,942 contracts from 26,307 a week earlier. The ratio of Canadian household debt to income widened to 169.1 percent in the second quarter from an upwardly revised 168.3 percent in the first quarter, Statistics Canada said.

Canadian government bond prices fell across much of a steeper yield curve in sympathy with U.S. Treasuries. The

10-year fell 13 Canadian cents to yield 2.343

percent. The 10-year yield touched its highest intraday since Aug. 8 at 2.365 percent.

(Reporting by Fergal Smith; Editing by Steve Orlofsky and James Dalgleish)