* Canadian dollar at C$1.2880, or 77.64 U.S. cents
* The price of oil falls 1.4 percent
* Bond prices higher across the yield curve
TORONTO, May 24 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices fell and investors weighed the potential imposition of U.S. tariffs on car imports.
The Trump administration has launched a national security investigation into car and truck imports that could lead to new U.S. tariffs, similar to those imposed on imported steel and aluminum in March. investigation comes as the United States renegotiates the North American Free Trade Agreement with Canada and Mexico to return more auto production to the United States.
Canada is a major exporter of autos to the United States so its economy could be hurt by U.S. auto tariffs or failure to reach a deal on NAFTA.
Oil is also one of Canada's major exports. Its price fell by the most in two weeks as expectations rose that OPEC will end an output deal that has been in place since the start of 2017. crude CLc1 prices were down 1.4 percent at $70.84 a barrel.
At 9:08 a.m. EDT (1308 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent lower at C$1.2880 to the greenback, or 77.64 U.S. cents.
The currency traded in a range of C$1.2829 to C$1.2898. On Wednesday, it touched its weakest in more than one week at C$1.2916.
The Bank of Canada will probably hold interest rates steady on May 30 as uncertain trade policy and indebted consumers necessitate caution, but firmer price and wage inflation will prompt two increases in the second half of 2018, a Reuters poll predicted. government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 2 Canadian cents to yield 2.016 percent and the 10-year CA10YT=RR gained 7 Canadian cents to yield 2.436 percent.