(Adds analyst quotes, updates prices)
* Canadian dollar settles at C$1.2962, or 77.15 U.S. cents
* C$ touches its strongest since July 15 at C$1.2925
* Bond prices higher across maturity curve
By Fergal Smith
TORONTO, Aug 12 (Reuters) - The Canadian dollar strengthened to a four-week high against its U.S. counterpart on Friday, as oil rallied and weaker-than-expected U.S. data weighed on the greenback.
The Canadian currency ended the week 1.5 percent higher. The currency had been hit on Aug. 5 by weak domestic employment and trade data that contrasted with a robust U.S. jobs report.
"You have had oil bouncing off its lows and you've had a weak (U.S.) dollar environment over the course of this week. So I think a combination of those two factors is driving demand for commodity, higher-yielding currencies," said Ian Gordon, FX strategist at Bank of America Merrill Lynch (NYSE:BAC).
Oil prices rose on possible action by producers to help stabilize the market. U.S. crude oil futures CLc1 settled up $1 at $44.49 a barrel. O/R
The U.S. dollar .DXY fell against a basket of major currencies after U.S. data showed that retail sales were unexpectedly flat in July. FRX/
The Canadian dollar CAD=D4 ended at C$1.2962 to the greenback, or 77.15 U.S. cents, stronger than Thursday's close of C$1.2980, or 77.04 U.S. cents.
The currency's weakest level of the session was C$1.2993, while it touched its strongest since July 15 at C$1.2925.
"I am still skeptical that it is going to continue as the Canadian macro data continues to disappoint," said Gordon.
"You have seen basically non-energy exports completely stalling out," he added.
Weak U.S. business investment has hampered a long-awaited pick-up in growth of Canada's non-energy exports, economists say, while a weaker Canadian dollar has not helped exports as much as expected. government bond prices were higher across the maturity curve in sympathy with U.S. Treasuries as expectations dipped for a Federal Reserve rate hike this year.
The two-year CA2YT=RR bond edged up 2.5 Canadian cents to yield 0.526 percent and the benchmark 10-year CA10YT=RR rose 19 Canadian cents to yield 1.011 percent.
Canada's Teranet-National Bank Composite House Price Index showed national home prices rose 2.0 percent last month from June. Prices were up 10.9 percent from a year earlier. by Jeffrey Benkoe and Jeffrey Hodgson)