* Canadian dollar at C$1.2683 or 78.85 U.S. cents
* Bond prices higher across the maturity curve
* Bullish bets on C$ hit highest level since January 2013
By Solarina Ho
TORONTO, Aug 11 (Reuters) - The Canadian dollar rebounded from a four-week low on Friday against the U.S. dollar, which weakened after data showed U.S. consumer prices rose less than expected in July.
The U.S. data, along with weaker-than-forecast producer prices earlier this week, could prompt the Federal Reserve to approach raising interest rates again this year with more caution. Anderson, global head of foreign exchange strategy for BMO Capital Markets in New York, said the data combined with profit-taking helped bolster the Canadian dollar.
Speculators have increased bullish bets on the loonie to the highest level since January 2013, according to data from the U.S. Commodity Futures Trading Commission and Reuters calculations. Canadian dollar net long positions rose to 62,821 contracts as of Aug. 8 from 40,638 contracts a week earlier.
"The trade between Tuesday's close and noon today was the opposite," said Anderson. "Particularly short-term traders have been long USD/CAD, so they took a little bit of profit on that."
At 4:00 p.m. ET (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.2684 to the greenback, or 78.84 U.S. cents, up 0.5 percent.
The currency, which was on track to fall 0.2 percent on the week, had retreated to C$1.2753 earlier in the session.
Anderson said the Canadian dollar would likely continue to trade between C$1.2550 and C$1.2750 in the near term.
A slight bump in the price of oil, a major Canadian export, also provided some support. U.S. crude CLc1 prices rose 0.37 percent to $48.77 a barrel in volatile trading, supported by higher global demand and instability in Nigeria. O/R
U.S. President Donald Trump issued a new threat to North Korea, saying U.S. weapons were "locked and loaded" as Pyongyang accused him of driving the Korean Peninsula to the brink of nuclear war.
As a major commodity producer, Canada could be hurt if geopolitics hamper global trade.
Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR price up 2 Canadian cents to yield 1.21 percent and the benchmark 10-year CA10YT=RR flat to yield 1.852 percent.
The Canada-U.S. two-year bond spread stood at -8.4 basis points, while the 10-year spread stood at -33.9 basis points.