* Canadian dollar at C$1.2914, or 77.44 U.S. cents
* Bond prices higher across the yield curve
* Canada's trade deficit narrows to C$1.91 billion
By Fergal Smith
TORONTO, March 7 (Reuters) - The Canadian dollar weakened against the greenback on Wednesday after the resignation of top U.S. economic adviser Gary Cohn added to worries of a trade war, but some losses were pared ahead of a Bank of Canada interest rate decision.
The central bank has raised interest rates three times sinceJuly but is expected to leave its benchmark rate on hold at 1.25percent on Wednesday, according to a Reuters poll. CA/POLL
"The economic data have softened and a number ofuncertainties suggest there's little reason to rush anothermove," said Benjamin Reitzes, senior economist at BMO CapitalMarkets in a research note.
Canada's trade deficit narrowed more than expected to C$1.91billion in January as imports pulled back from a record high,but exports tumbled by the most in six months as the countryshipped fewer cars and forestry products, data from StatisticsCanada showed. resignation of Cohn could give free trade skeptics theupper hand in the White House. sends 75 percent of its exports to the United States.Its economy could be hurt by planned U.S. tariffs on steel andaluminum and by an uncertain outlook for the North American FreeTrade Agreement.
At 8:58 a.m. EST (1358 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent lower at C$1.2914 to the greenback, or77.44 U.S. cents.
The currency's strongest level of the session was C$1.2876,while its weakest level was C$1.2960. On Monday, the loonietouched its weakest in eight months at C$1.3002.
Still, the Canadian dollar is forecast to rally over thecoming year, a Reuters poll showed, as global economic strengthand a broadly weaker greenback offsets investor fears of a tradewar. crude CLc1 prices were down 0.30 percent at $62.41 abarrel. Oil is one of Canada's major exports. government bond prices were higher across the yieldcurve in sympathy with U.S. Treasuries as global stocks fell.
The two-year CA2YT=RR rose 1.5 Canadian cents to yield1.768 percent and the 10-year CA10YT=RR gained 9 Canadiancents to yield 2.221 percent.
Canada's employment report for February is due on Friday.