CANADA FX DEBT-C$ gains as currency avoids Trump's ire

* Canadian dollar settles at C$1.3020, or 76.80 U.S. cents
    * Bond prices flat to slightly higher across flatter yield
    * 10-year yield recovers after touching lowest in over a

    By Morgan Sharp
    TORONTO, Feb 2 (Reuters) - The Canadian dollar made gains
against its U.S. counterpart on Thursday as investors cheered
the loonie's absence from a list of currencies attracting the
ire of U.S. President Donald Trump.
    The U.S. dollar hit its lowest level since
mid-November against a basket of currencies before recovering,
after the U.S. Federal Reserve disappointed investors hoping for
a clear sign of a March interest rate rise and signs the new
U.S. administration favors a weaker greenback weighed.
    Trump and his top trade adviser this week criticized
Germany, Japan and China, saying the three key U.S. trading
partners were engaged in devaluing their currencies to the harm
of U.S. companies and consumers. 
    "The odd one out is the Canadian dollar," said Adam Button,
currency analyst at ForexLive in Montreal. "Every day that goes
by where Trump doesn't criticize Canadian trade policy is a win
for the Canadian dollar."
    Canadian officials are convinced Mexico will suffer the most
damage from any changes to the North American Free Trade
Agreement, which Trump wants to rework and under which Canada
sends 75 percent of its exports to the United States.
    Gains for the loonie also came after domestic data this week
showed that the economy expanded faster than expected in
November, and that the manufacturing sector grew at its fastest
pace in over two years in January.
    The Canadian dollar settled at C$1.3020 to the
greenback, or 76.80 U.S. cents, stronger than Wednesday's close
of C$1.3047, or 76.65 U.S. cents.
    The currency traded in a range of C$1.2981 to C$1.3050.
    Canadian car and light truck sales rose 2.2 percent in
January over last year to an all-time record for the month,
DesRosiers Automotive Consultants said on Wednesday. 
    On Tuesday, Bank of Canada Governor Stephen Poloz made clear
that the central bank sees no need to follow the Fed with
interest rate hikes, and he reiterated that the firmer Canadian
dollar was a headwind for the export sector. 
    The loonie rose 3.2 percent in January after climbing 3.1
percent in 2016. On Tuesday, it touched its strongest level
since Sept. 9 at C$1.2969.    
    Canadian government bond prices were steady to slightly
higher across a flatter yield curve, with the two-year
 unchanged to yield 0.774 percent, and the 10-year
 up 3 Canadian cents to yield 1.764 percent, after
touching its lowest intraday since Jan. 24 at 1.712 percent.

 (Additional reporting by Fergal Smith; Editing by W Simon and
Diane Craft)