CANADA FX DEBT-Canadian dollar rebounds on Fed independence worries

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Canadian dollar gains 0.3% against the greenback

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Trades in a range of 1.3868 to 1.3917

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Price of oil increases 0.2%

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Bond yields edge up across the curve

By Fergal Smith

TORONTO, Jan 12 (Reuters) - The Canadian dollar clawed back some recent declines against ?its U.S. counterpart on Monday as increased concerns about the independence of the Federal Reserve weighed ?on the greenback.

The loonie was trading 0.3% higher at 1.3875 ?per U.S. dollar, or 72.07 U.S. cents, after trading ?in a range ?of 1.3868 to 1.3917. On Friday, the currency touched a five-week low at 1.3920.

The U.S. dollar ?fell against a basket of major currencies ?after the U.S. Department of Justice threatened to indict Federal Reserve Chair Jerome Powell over comments to Congress about ?a building renovation project. Powell ?called the action ?a "pretext" to gain more influence over interest rates.

"I think the Canadian dollar's rebound has more to do with U.S. political risk ?than anything happening domestically," said Tony Valente, senior FX dealer at AscendantFX.

"Headlines around a potential Trump administration criminal investigation into the Fed Chair have unsettled markets and raised concerns about central bank independence, which has weighed on the USD. The loonie is really benefiting from ?USD weakness rather ?than a shift in Canadian fundamentals."

Data on Friday showed that the Canadian economy added jobs at a slower pace in ?December, while investors have worried that a boost in Venezuelan oil exports to the United States could hurt Canadian companies that sell a similar heavy oil.

The price of oil was trading 0.2% higher at $59.25 a barrel as investors weighed anti-government demonstrations in major oil producer Iran.

Canadian Prime Minister Mark Carney has ?vowed to diversify Canada's exports away from the United States. He is set to visit China this week.

Canadian bond yields edged higher across the curve, with the 10-year up 0.7 ?basis points at 3.400%. (Reporting by Fergal Smith; Editing by Alistair Bell)