* Canadian dollar at C$1.2860, or 77.76 U.S. cents
* Loonie touches its weakest since April 3 at C$1.2914
* Canadian economy grows 0.4 percent in February
* Bond prices lower across the yield curve
By Fergal Smith
TORONTO, May 1 (Reuters) - The Canadian dollar fell to a four-week low against its U.S. counterpart on Tuesday before paring its decline, as Bank of Canada Governor Stephen Poloz said the outlook for the domestic economy is good despite the overhang of high household debt.
At 4 p.m. EDT (2000 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent lower at C$1.2860 to the greenback, or 77.76 U.S. cents.
The currency touched its weakest level since April 3 at C$1.2914 as the U.S. dollar .DXY climbed to a nearly four-month high against a basket of major currencies. said there is good reason to believe the central bank can manage the risks of Canada's high household debt, even as he signaled that interest rate hikes will continue, increasing the cost of that debt. economy grew 0.4 percent in February, Statistics Canada said, a sign that first-quarter growth could be stronger than the Bank of Canada is predicting. CAD is outperforming on the crosses and that is a reflection of somewhat better data and oil prices ticking up again," said Shaun Osborne, chief currency strategist at Scotiabank.
The loonie touched its strongest against the euro since Feb. 9 at C$1.5396.
U.S. crude oil futures CLc1 settled 1.9 percent lower at $67.25 a barrel. Still, oil has climbed about 16 percent since February.
Canada will push for a permanent exemption from U.S. steel and aluminum tariffs but the U.S. administration's decision to postpone them is a "step forward," Canadian Foreign Minister Chrystia Freeland said. government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 8 Canadian cents to yield 1.935 percent and the 10-year CA10YT=RR falling 34 Canadian cents to yield 2.347 percent.