(Adds strategist quotes and details throughout and updates prices) * Canadian dollar ends at C$1.3650, or 73.26 U.S. cents * Loonie touches a fresh 14-month low at C$1.3697 * Currency loses 2.6 percent for the month * Bond prices rise across the yield curve By Fergal Smith TORONTO, April 28 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, retaining this week's defensive bias in the face of an uncertain trade outlook, while domestic data showed the economy stalled in February.
The currency's official close, which was published for the last time by the Bank of Canada, was C$1.3650 to the greenback, or 73.26 U.S. cents, weaker than Thursday's close of C$1.3624, or 73.40 U.S. cents.
"It is all about trade, which has been whipping the currency around," said Amo Sahota, director at Klarity FX in San Francisco.
President Donald Trump told Reuters on Thursday that he had been "psyched" to terminate the North American Free Trade Agreement with Canada and Mexico on Saturday, but then changed his mind after their leaders asked for it to be renegotiated instead. He said he will not hesitate to change course again and pull the plug if the negotiations become "unserious." The Canadian dollar's strongest level of the session was C$1.3625, while it touched its weakest since February 2016 at C$1.3697. For the week, the loonie fell 1.1 percent and for the month, it was down 2.6 percent.
The underlying trend has been for a weaker Canadian dollar and that has been supported by fundamentals, such as widening yield spreads, Sahota said.
Canada's 2-year yield has fallen this week nearly 8 basis points further below its U.S. equivalent to a spread of -54.9 basis points, nearly its biggest gap since January 2016.
Liquidity issues at a non-bank mortgage lender, unrelated to actual performance, added to pressure on the loonie this week, according to a research note by Avery Shenfeld, at CIBC Capital Markets.
Canadian gross domestic product was flat in February, matching the forecast by analysts in a Reuters poll, after robust growth in January.
"It is a soft month in an otherwise solid quarter," said Derek Holt, head of capital markets economics at Scotiabank.
U.S. crude oil prices settled 36 cents higher at $49.33 a barrel, rebounding from a one-month low the previous day as investors weighed whether Organization of the Petroleum Exporting Countries will extend output cuts at its May meeting.
Canadian government bond prices were higher across the yield curve, with the two-year up 3.5 Canadian cents to yield 0.717 percent and the 10-year rising 25.8 Canadian cents to yield 1.546 percent.
On Thursday, the 10-year yield touched a three-week high at 1.621 percent.
(Reporting by Fergal Smith; Editing by Nick Zieminski and Sandra Maler)