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* Canadian housing starts fall 13.3% in May
* Price of U.S. oil falls decreases 73 cents to $53.26 a barrel
* Canadian bond prices decline across the yield curve
* Canada's 10-year yield touches a 10-day high at 1.537%
TORONTO, June 10 (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Monday, pulling back from an earlier three-month high reached after the United States dropped plans to impose tariffs on Mexican goods.
Potential U.S. tariffs on Mexican goods could undermine chances of a new North American trade deal coming into force. Canada sends about 75% of its exports to the United States. Investors in the Canadian dollar run the risk of being "blindsided" by financial market volatility caused by global trade disputes, which has offset the boost for the currency from recent strong employment data, said Scott Lampard, head of global markets at HSBC Bank Canada. U.S. President Donald Trump said he was ready to impose another round of punitive tariffs on Chinese imports if he does not reach a trade deal with China's president at a Group of 20 summit later this month. On Friday, Canadian data showing a record low unemployment rate supported the Bank of Canada's view that the economy will recover after a temporary slowdown. The market believes the Bank of Canada will not be "as aggressive" as the Federal Reserve in cutting interest rates, Lampard said. Money markets see about a 50% chance of a Bank of Canada interest rate cut by December, while they are pricing in at least two cuts over the same period from the Fed.
At 4:00 p.m. (2000 GMT), the Canadian dollar was
trading nearly unchanged at 1.3266 to the greenback, or 75.38 U.S. cents. The currency, which climbed 1.9% last week, touched its strongest intraday level since March 1 at 1.3226. Canadian housing starts fell 13.3% in May compared with the previous month as groundbreaking on multiple unit urban homes slowed, data from the national housing agency showed.
The price of oil, one of Canada's major exports, declined as major producers had yet to agree on extending an output-cutting
deal. U.S. crude oil futures settled 73 cents lower at
$53.26 a barrel.
Meanwhile, the U.S. dollar rose against a basket of
major currencies after sources said European Central Bank policymakers were open to cutting the ECB's policy rate should economic growth worsen, pressuring the euro. Canadian government bond prices were lower across the yield
curve, with 10-year falling 50 Canadian cents to
yield 1.514%. The 10-year yield touched its highest intraday since May 31 at 1.537%.
(Reporting by Fergal Smith Editing by Susan Thomas and Sonya Hepinstall)