* 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. 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 implemented. U.S. dollar .DXY 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. crude CLc1 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. O/R
Oil is one of Canada's major exports.
At 9:24 a.m. ET (1424 GMT), the Canadian dollar CAD=D4 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. cents.
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 CA2YT=RR dipped 1.5 Canadian cents to yield 0.776 percent, and the 10-year CA10YT=RR declined 9 Canadian cents to yield 1.72 percent.
Canada's employment report for February is due on Friday.