• Loonie touches a two-week high at 1.3479
• Canada's trade surplus widens in February
• Price of U.S. oil settles 1.4% higher
• Canadian bond yields ease across curve

TORONTO, April 4 (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, giving back its earlier gains, as investors assessed recent strength in commodities and awaited domestic jobs data that could offer clues on prospects of avoiding a recession.

The loonie was trading 0.1% lower at 1.3535 to the U.S. dollar, or 73.88 U.S. cents, after touching its strongest intraday level since March 21 at 1.3479. The pullback from a two-week high came as Wall Street turned lower.

Weaker-than-expected U.S. services data and an upside breakout in copper prices had helped support the Canadian currency in recent days, said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.

"The commodity trade could be a tailwind for the Canadian (dollar) if it keeps going," Bregar added.

Canada is a major producer of commodities, including oil, copper and gold. It recorded a bigger-than-expected trade surplus of C$1.39 billion ($1.03 billion) in February as a record level of unwrought gold helped exports outpace the rise in imports.

Copper was up 1.1% on Thursday, while the price of oil settled 1.4% higher at $86.59 a barrel.

Still, the Canadian dollar is set to strengthen less than previously thought over the coming year as sticky inflation potentially delays Federal Reserve interest rate cuts and uncertainty grows ahead of the U.S. presidential election, a Reuters poll found.

Economists expects Canada's employment data, due on Friday, to show the economy adding 25,000 jobs in March.

"The market will very much welcome something that is better than expected. Hopes are rising that we are not going to see a recession," Bregar said.

Canadian bond yields eased across the curve. The 10-year was down 2.1 basis points at 3.574% after on Tuesday touching its highest intraday level in nearly three weeks at 3.678%.

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https://www.reuters.com/markets/currencies/canadian-dollar-pulls-back-2-week-high-ahead-jobs-data-2024-04-04/