* Canadian dollar trades nearly unchanged against the greenback
* U.S. oil prices decrease by 1.6%
* Canadian bond prices move higher across the yield curve
* Canada's curve inverts further to the most in two decades
By Levent Uslu
TORONTO, Aug 15 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Thursday but held close to an eight-day low it hit earlier in the session as investors raised bets for an interest rate cut this year by the Bank of Canada.
The inversion of Canada's yield curve by the most in nearly two decades is threatening to coerce the Bank of Canada to cut interest rates rather than risk an economic downturn, portfolio managers said. of a Bank of Canada interest rate cut this year climbed to nearly 100% from less than 90% on Wednesday, the overnight index swap market indicated. BOCWATCH
Last month, the Bank of Canada highlighted the risks that trade wars pose to the global economy as it left its benchmark interest rate unchanged at 1.75%. 10:03 a.m. (1403 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3319 to the greenback, or 75.08 U.S. cents. The currency touched its weakest intraday level since last Wednesday at 1.3338.
The eight-day low for the loonie came despite domestic data showing that non-farm payroll employment rose by 73,700 in July and that home sales climbed for a fifth consecutive month. the price of oil, one of Canada's major exports, fell on mounting recession concerns and a surprise boost in U.S. crude inventories. U.S. crude oil futures CLc1 were down 1.6% at $54.36 a barrel. government bond prices were higher across a more inverted yield curve, with the two-year CA2YT=RR up 4.3 Canadian cents to yield 1.329% and the 10-year CA10YT=RR rising 23.7 Canadian cents to yield 1.120%.
The 10-year yield fell 0.1 basis points further below the 2-year yield to a spread of -20.6 basis points, the curve's largest inversion since May 1999. An inverted curve is seen by some investors as a harbinger of recession.