* Canadian dollar at C$1.3626, or 73.39 U.S. cents
* Bond prices higher across a flatter yield curve
* Gap between 2- and 10-year yields narrowest in 2 weeks
TORONTO, May 17 The Canadian dollar pared some
of this week's gains on Wednesday against its U.S. counterpart
as political uncertainty in Washington supported safe-haven
currencies, while domestic manufacturing sales rose in line with
Manufacturing sales rebounded 1.0 percent in March, driven
by gains in the motor vehicle sector and record sales in the
food industry, data from Statistics Canada showed.
The yen and the Swiss franc outperformed as the U.S. dollar
fell against a basket of major currencies. Talk that
President Donald Trump could face the threat of impeachment
weighed on risk-sensitive assets, including richly valued
At 8:58 a.m. ET (1258 GMT), the Canadian dollar was
trading at C$1.3626 to the greenback, or 73.39 U.S. cents, down
0.1 percent, according to Reuters data.
The currency, which has gained 0.6 percent this week, traded
in a range of C$1.3580 to C$1.3638.
Losses for the loonie came even as prices of oil, one of
Canada's major exports, climbed. U.S. crude prices were
up 0.37 percent at $48.84 a barrel ahead of U.S. crude inventory
data that could give investors a clue as to whether an
Organization of the Petroleum Exporting Countries-led output cut
is making progress in reducing the persistent global supply
A more uncertain trade outlook with the United States and
troubles at an alternative mortgage lender had helped pressure
the Canadian dollar to a 14-month low at C$1.3793 earlier this
Mexican Economy Minister Ildefonso Guajardo said on Tuesday
he expects Trump's administration to tell Congress early next
week of plans to renegotiate the North American Free Trade
Agreement, a move that would produce talks by late August.
Also on Tuesday, Canada's biggest non-bank lender Home
Capital Group Inc published data showing its deposit
balances were continuing to decline.
Canadian government bond prices were higher across a flatter
yield curve, with the two-year up 4.5 Canadian cents
to yield 0.678 percent and the 10-year climbing 48
Canadian cents to yield 1.520 percent.
The gap between 2-year and 10-year yields narrowed by 3
basis points to a spread of 84.2 basis points, its narrowest
since May 2, as longer-dated bonds outperformed.
(Reporting by Fergal Smith; Editing by Meredith Mazzilli)