* Canadian dollar weakens 0.2 percent against the greenback
* Domestic wholesale trade falls 0.1 percent in August
* Canadian Bond prices rise across a flatter yield curve
TORONTO, Oct 22 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Monday as the greenback broadly rose and domestic data showed a surprise dip in wholesale trade, while a Bank of Canada interest rate decision was due later in the week.
Canadian wholesale trade decreased by 0.1 percent in August from July as weaker sales in the building material and supplies and motor vehicles and parts subsectors led the decline, Statistics Canada reported on Monday. Analysts forecast a 0.2 percent increase. inflation and retail sales data last Friday also came in weaker than expected. money markets expect the Bank of Canada to raise its key interest rate this week by 25 basis points to 1.75 percent. It would be the fifth hike since July 2017. BOCWATCH
The U.S. dollar .DXY rose against a basket of currencies as the potential of further political uncertainty in Europe over Italy's spending plans weighed on the euro. 9:37 a.m. (1337 GMT), the Canadian dollar CAD=D4 traded 0.2 percent lower at 1.3112 to the greenback, or 76.27 U.S. cents.
The currency, which touched its weakest in more than five weeks on Friday at 1.3032, traded in a narrow range between 1.3080 and 1.3117.
U.S. crude CLc1 prices were down 1 percent at $68.41 a barrel as Saudi Arabia said it would soon raise output. government bond prices were higher across a flatter yield curve, with the two-year CA2YT=RR up 3 Canadian cents to yield 2.284 percent and the 10-year CA10YT=RR rising 20 Canadian cents to yield 2.476 percent.
The gap between Canada's 10-year yield and its U.S. equivalent widened by 0.9 basis points to a spread of 71.1 basis points in favor of the U.S. bond, its widest since July 24.