* Canadian dollar at C$1.2847, or 77.84 U.S. cents
* Bond prices higher across the yield curve
TORONTO, Dec 7 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, adding to losses from the day before, when the Bank of Canada held interest rates steady and tempered expectations for a hike early next year. The central bank struck a more dovish tone than investors had expected after very strong employment data on Friday.
Still, the Canadian dollar is likely to strengthen over the coming year, a Reuters poll showed, on assumptions that uncertainty over trade lifts and a stronger economy boosting inflation will prompt the Bank of Canada to resume raising rates.
At 9:39 a.m. ET (1439 GMT), the Canadian dollar was
down 0.5 percent at C$1.2847 to the greenback, or 77.84 U.S. cents. The currency, which touched its weakest since Friday at C$1.2860, lost ground despite firm domestic data and a higher price of oil, one of Canada's major exports.
U.S. crude prices rose 0.7 percent to $56.37 a
barrel. The value of Canadian building permits increased 3.5 percent in October from September, more than economists had expected, on increased plans for commercial and residential construction.
The U.S. dollar reached a two-week high against a
basket of currencies on optimism that the United States will push through a tax overhaul. Canadian government bond prices were higher across the yield
curve, with the two-year up 1.5 Canadian cents to yield 1.481 percent and the 10-year rising 17
Canadian cents to yield 1.837 percent. The gap between Canada's two-year yield and its U.S. equivalent widened by 1.5 basis points to a spread of -33.3 basis points.
(Reporting by Fergal Smith; Editing by Lisa Von Ahn)