(Adds analyst quotes and details throughout; updates prices)
* Canadian dollar weakens 0.5% against the greenback
* Loonie touches weakest level since March 31 at 1.2634
* Canada's trade surplus narrows in February to C$1 billion
* Canada's 10-year yield was little changed at 1.490%
By Fergal Smith
TORONTO, April 7 (Reuters) - The Canadian dollar weakened to
a one-week low against its U.S. counterpart on Wednesday as
commodity-linked currencies broadly lost ground and domestic
data showed the trade surplus narrowing in February.
The loonie was trading 0.5% lower at 1.2621 to the
greenback, or 79.23 U.S. cents, having touched its weakest
intraday level since March 31 at 1.2634.
"The commodity currencies began today's session under
pressure after overnight activity, and this theme has largely
continued through the day as well," George Davis, chief
technical strategist at RBC Capital Markets said by email. "Our
positioning models have shown that long positions have been
built up in commodity FX over the past 3-4 weeks."
Both the Australian and New Zealand dollars
fell about 0.7%, giving back some recent gains. Like Canada,
Australia and New Zealand are major commodity exporters.
Canada's trade surplus with the world narrowed in February
to C$1 billion as a global shortage of semiconductor chips hit
both imports and exports, Statistics Canada said.
"Looking past the monthly gyrations, trade shipments have
continued to recover and are expected to see further improvement
this year as the global economy picks up the pace of recovery,"
said Ryan Brecht, a senior economist at Action Economics.
The price of oil, one of Canada's major exports, settled
0.7% higher at $59.77 a barrel, while Ivey Purchasing Managers
Index data showed that Canadian economic activity expanded at
its fastest pace in 10 years in March.
Analysts have raised their Canadian dollar forecasts for the
coming year, expecting the currency to benefit from faster
growth in the domestic economy and a potential reduction of
bond-buying by the Bank of Canada.
The Canadian employment report for March, due on Friday,
could offer clues on the central bank's policy outlook.
Canada's 10-year yield was little changed at
1.490%.
(Reporting by Fergal Smith; Editing by Jonathan Oatis and Will
Dunham)
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