CANADA FX DEBT-Canadian dollar hits one-month low as investors reduce risky bets

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Loonie touches its weakest since December 5 at 1.3888

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Canada posts smaller-than-expected trade deficit

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10-year yield rises 1.1 basis points to 3.409%

By Fergal Smith

TORONTO, Jan 8 (Reuters) - The Canadian dollar steadied near a one-month low against its U.S. counterpart on Thursday as the recent increase ?in geopolitical uncertainty weighed on commodity-linked currencies and investors awaited domestic jobs data.

The loonie was trading nearly unchanged ?at 1.3865 per U.S. dollar, or 72.12 U.S. cents, after touching its ?weakest intraday level since December 5 at 1.3888.

"I think this ?is a risk-sensitive ?currency move," said Amo Sahota, director at Klarity FX in San Francisco.

Elevated geopolitical risk "is making people ?take off a few of the aggressive positions ?that they originally wanted to have on in the market place."

Canada is a major producer of commodities, including oil, which has ?been buffeted this week by the ?prospect of ?increased crude supply from Venezuela.

The Australian dollar and the New Zealand dollar , two other commodity-linked currencies, posted declines. The safe-haven U.S. dollar added to ?this week's gains against a basket of major currencies.

"While the Canadian economy is surviving ... you have still got the USMCA deal to get through, you have still got a very feeble labour market in Canada because most of the jobs that we saw are in part-time jobs not in full-time jobs," ?Sahota said.

The ?United States-Mexico-Canada Agreement, a continental trade pact which has shielded much of Canada's exports from U.S. tariffs, is up for joint review in ?2026.

The Canadian dollar is expected to strengthen more than previously expected over the coming year if the Federal Reserve continues to cut interest rates and the USMCA review reduces economic uncertainty, a Reuters poll found.

Canada's employment report for December, due on Friday, is expected to show the economy shedding 5,000 jobs and the unemployment rate ticking up to ?6.6%.

Data on Thursday showed that Canada recorded a smaller-than-expected trade deficit in October and the share of exports to the United States fell to its lowest ever non-pandemic level. The Canadian 10-year yield ?was up 1.1 basis points at 3.409%. (Reporting by Fergal Smith; editing by Diane Craft)