CANADA FX DEBT-Canadian dollar steadies as investors assess U.S. trade tariff clues

*

Loonie trades in a range of 1.4393 to 1.4436

*

10-year yield touches a 7-week low at 3.120%

*

Oil touches a 4-week low

By Fergal Smith

TORONTO, Jan 30 - The Canadian dollar steadied against its U.S. counterpart on Thursday and bond yields fell as the European Central Bank cut interest rates as expected and investors weighed a possible signal that Canada could avoid U.S. trade tariffs.

The loonie was trading nearly unchanged at 1.4415 to the U.S. dollar, or 69.37 U.S. cents, after moving in a range of 1.4393 to 1.4436. Last week, the currency touched a near five-year low at 1.4515, while it has lost about 6% since the beginning of October.

"Currency markets are steadying this morning after several central bank decisions passed without triggering undue volatility, and President Donald Trump's nominee for commerce secretary suggested that tariffs might not be implemented against Canada and Mexico," Karl Schamotta, chief market strategist at Corpay, said in a note.

U.S. Commerce Secretary nominee Howard Lutnick said on Wednesday that Canada and Mexico could avoid looming U.S. tariffs if they acted swiftly to close their borders to fentanyl. Trump has flagged possible 25% duties on imports from Canada and Mexico on Feb. 1 and a White House spokesperson said on Tuesday he planned to make good on the threat.

The Bank of Canada on Wednesday said that the loonie's decline since October was mostly due to rising uncertainty around trade policies as it cut its benchmark interest rate by 25 basis points.

Canada sends about 75% of its exports to the U.S., including oil, which touched a four-week low at $72.02 a barrel before recovering some ground.

The U.S. dollar dipped against a basket of major currencies as data showing slower-than-expected U.S. economic growth.

Canadian bond yields eased across a flatter curve, tracking moves in U.S. Treasuries and European government bonds. The 10-year was down 1.8 basis points at 3.155%, after earlier touching its lowest level since Dec. 12 at 3.120%. (Reporting by Fergal Smith; Editing by Alison Williams)