(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar at C$1.2887, or 77.60 U.S. cents
* Loonie touches its weakest since Dec. 19 at C$1.2915
* Bond prices lower across the yield curve
* 10-year yield touches lowest intraday since Jan. 17
By Fergal Smith
TORONTO, March 2 (Reuters) - The Canadian dollar weakenedagainst its U.S. counterpart on Friday, adding to 10-week lowsas data showed slower-than-expected growth in the domesticeconomy and investors braced for planned U.S. tariffs on steeland aluminum.
At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 wastrading 0.4 percent lower at C$1.2887 to the greenback, or 77.60U.S. cents. It touched its weakest level since Dec. 19 atC$1.2915.
U.S. President Donald Trump unveiled the tariffs on Thursdaybut did not make clear whether they would apply to Canada, whichis the largest supplier of both steel and aluminum to the UnitedStates. the sanctions cover Canada, it hurts," said GregAnderson, global head of foreign exchange strategy in New York."This is a fluid situation ... there is still some chance thatCanada gets exempted."
Trump's threats to unleash a trade war over steel crushedany hopes of substantial progress in talks to rework the NorthAmerican Free Trade Agreement. sends 75 percent of its goods exports to the UnitedStates. A collapse of NAFTA could hurt its economy, which grewby an annualized 1.7 percent in the final quarter of 2017, shortof economists' forecasts for 2.0 percent. is just consistent with an economy that is seeing growthconverge back to its trend pace," said Andrew Kelvin, seniorrates strategist at TD Securities.
Still, money markets expect another interest rate hike fromthe Bank of Canada by July. The central bank raised itsbenchmark interest rate in January to 1.25 percent, its thirdhike in six months. BOCWATCH
The price of oil, one of Canada's largest exports, rose onFriday, but posted its first weekly fall in three weeks. cut bullish bets on the Canadian dollar for thethird straight week, data from the U.S. Commodity FuturesTrading Commission and Reuters calculations showed. As of Feb.27, net long positions had fallen to 22,220 contracts from23,127 a week earlier.
Canadian government bond prices edged lower across the yieldcurve in sympathy with U.S. Treasuries after the Bank of Japan'schief hinted at a possible exit from its ultra-easy policies. 10-year CA10YT=RR fell 19 Canadian cents to yield2.201 percent. Intraday, it had touched its lowest since Jan. 17at 2.155 percent.
The gap between Canada's 10-year yield and its U.S.equivalent widened by 4.1 basis points to -66.7 basis points,its widest since June 26.