* Canadian dollar at C$1.3240, or 75.53 U.S. cents
* Loonie touches its weakest since July 27 at C$1.3246
* Bond prices mixed across the yield curve
TORONTO, Sept 16 (Reuters) - The Canadian dollar weakened to set a new seven-week low against its broadly firmer U.S. counterpart on Friday as oil fell and domestic manufacturing sales rose by less than expected.
Canadian manufacturing sales edged up by 0.1 percent in July from June, Statistics Canada data indicated, held back by weakness in the machinery and aerospace sectors. The gain was well below the 1 percent gain forecast by analysts in a Reuters poll.
In volume terms, sales climbed by a more robust 0.6 percent. U.S. dollar rose against a basket of major currencies as U.S. consumer prices increased more than expected in August, pointing to a steady build-up of inflation that could allow the Federal Reserve to raise interest rates this year. probability of a Fed rate hike next week rose to 15 percent from 12 percent on Thursday, according to CME Group's FedWatch tool.
In contrast, overnight index swaps imply a 25 percent chance of a Bank of Canada interest rate cut by mid-2017. The probability was little changed after the manufacturing data. BOCWATCH
Oil prices fell to multi-week lows as rising Iranian exports and returning supplies from Libya and Nigeria fueled concerns that a global glut would persist. U.S. crude CLc1 prices were down 2.53 percent at $42.8 a barrel. O/R
At 9:29 a.m. EDT (1329 GMT), the Canadian dollar CAD=D4 was trading at C$1.3240 to the greenback, or 75.53 U.S. cents, weaker than Thursday's close of C$1.3160, or 75.99 U.S. cents.
The currency's strongest level of the session was C$1.3143, while it touched its weakest since July 27 at C$1.3246.
In separate data, foreign investment in Canadian securities slowed in July for the fourth straight month, largely because purchases of stocks collapsed from the 12-year highs seen in June, Statistics Canada said. government bond prices were mixed across the yield curve, with the two-year CA2YT=RR bond flat to yield 0.576 percent and the benchmark 10-year CA10YT=RR rising 2 Canadian cents to yield 1.195 percent.
Germany's economy minister said on Thursday he expected the country's Social Democrats, a junior partner in the ruling coalition,to vote in favor of a free-trade agreement between Canada and the European Union at a party meeting on Sept. 19.