CANADA FX DEBT-C$ steadies against firmer greenback as exports rise

    * Canadian dollar at C$1.3412, or 74.56 U.S. cents
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, March 7 (Reuters) - The Canadian dollar held its
ground on Tuesday against a broadly firmer greenback as oil
prices rose and domestic data showed a third consecutive monthly
trade surplus in January.
    The C$807 million surplus slightly exceeded analysts'
forecasts of a C$700 million positive balance. Exports rose by
0.5 percent while volumes expanded by 1.0 percent.             
    "I think it provides some modest encouragement but I think
it still leaves the Bank (of Canada) in data watch mode,
remaining on the sidelines," said Paul Ferley, assistant chief
economist at Royal Bank of Canada.
   "Their big concern is the prospect of protectionism emerging
from the U.S. Certainly, if anything on that front were to
emerge, these tentative signs of improvement could get swamped
by signs of policy initiative emerging from the U.S."
    Canada sends about 75 percent of its exports to the United
States and could suffer badly if U.S. President Donald Trump
follows through on promises to renegotiate the North American
Free Trade Agreement or if a proposed border adjustment tax is
    The U.S. dollar        gained 0.23 against a basket of
currencies in morning trade as investors braced for a potential
interest rate increase next week by the Federal Reserve.
    U.S. crude        prices were up 0.96 percent at $53.71 a
barrel, with investors seeking clearer direction from upcoming
inventory data and comments from senior oil officials.      
    Oil is one of Canada's major exports.
    At 9:24 a.m. ET (1424 GMT), the Canadian dollar          was
trading at C$1.3412 to the greenback, or 74.56 U.S. cents,
slightly weaker than Monday's close of C$1.3410, or 74.57 U.S.
    The currency's strongest level of the session was C$1.3383,
while its weakest was C$1.3421. On Friday, the loonie touched a
nearly two-month low at C$1.3437.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
dipped 1.5 Canadian cents to yield 0.776 percent, and the
10-year             declined 9 Canadian cents to yield 1.72
    Canada's employment report for February is due on Friday.

 (Reporting by Fergal Smith Editing by W Simon)